Mackenzie Insurance Company collected a premium of $15000 for a 1-year insurance policy on May 1. What amount should Mackenzie report as a current liability for Unearned Insurance Revenue at December 31?

Question

Quizplus · Accepted Answer

The insurance policy covers a 12-month period from May 1, meaning 8 months have passed by December 31, leaving 4 months of coverage unearned. The unearned portion is $5,000 ($15,000 annual premium divided by 12 months, multiplied by the 4 remaining months).

Mackenzie Insurance Company Collected a Premium of $15000 for a 1-Year