(See attached file for full problem description)
On July 1, 2006, Orlow Co. pays $12,000 to Pizner Insurance Co. for a 3-year insurance
contract. Both companies have fiscal years ending December 31. For Orlow Co., journalize and
post the entry on July 1 and the adjusting entry on December 31.
Prepare adjusting entry for prepaid expense.
Using the data in BE3-5, journalize and post the entry on July 1 and the adjusting entry
on December 31 for Pizner Insurance Co. Pizner uses the accounts Unearned Insurance Revenue
and Insurance Revenue.
Prepare adjusting entry for unearned revenue.
Solution to your problem is provided in a separate excel sheet which is attached herewith. Journal entries and ledger accounts for Orlow Co is given in first sheet and for Pizner Co in second sheet of the same Excel file.