An insurance company received advance payments of $12,000 from clients during the current year.At December 31,$10,000 of the advance payments still had not been earned.After the adjustments are recorded and posted at December 31,what will the balances be in the unearned insurance revenue and insurance revenue accounts?

Question

Quizplus · Accepted Answer

At the end of the year, $10,000 of the advance payments had not been earned, so this amount remains in the unearned insurance revenue account. The remaining $2,000 ($12,000 total advance payments - $10,000 unearned) is recognized as earned and thus recorded in the insurance revenue account.

An Insurance Company Received Advance Payments of $12,000 from Clients