Health Insurance Journal Entry
Loss due to fire insurance adjustment insurance recovered by.
Health insurance journal entry. Your business pays the total cost of coverage to the insurer once a month and posts the entire expense to the accounting general ledger. 1 000 when the health insurance bills arrive we will book the expenses based on the invoices. This is accomplished with a debit of 1 000 to insurance expense and a credit of 1 000 to prepaid insurance. The journal entry for prepaid expenses involves two accounts.
Free financial statements cheat sheet. For example a business buys one year of general liability insurance in advance for 12 000. Prepaid expense a c and expense a c. You need to create a journal entry for the payroll deductions to offset the total cost of the health insurance premium paid.
The journal entry would be. This same adjusting entry will be prepared at the end of each of the next 11 months. When insurance is due for each quarter i e. When abc company issues mary her paycheck for the most recent pay period they would post the following entry to decrease.
When the invoice is entered debit insurance expense for x months in the new policy period with the balance debited to prepaid insurance. Journal entry for prepaid expenses prepaid expenses are those expenses which are paid in advance for a benefit yet to be received. Dr insurance company debtor 1 500 dr accumulated depreciation 500 cr equipment 2 000 dr bank 1 500 cr insurance company 1 500 hope that helps. Repeat 1 2 as necessary 4.
If your employees pay a portion of the cost of their health insurance premium you normally deduct the employee s share from his payroll check and record those payroll deductions in your accounting general ledger. Anonymous sir in my factory an accident happened and all assets were destroyed by fire. Journal entries when prepaid insurance is due. The company will then debit health insurance expense for the full insurance billing of 300.
Thus the amount charged to expense in an accounting period is only the amount of the prepaid insurance asset ratably assigned to that period. Founder of accounting basics for students. Are these the correct journal entries that we need to make. Accounts payable 1 000 july 2017 dr.
720 00 fica taxes payable 7 65 x 720 55 08 federal income tax payable 58 00 state income tax payable 21 00 health insurance payable 50 00 wages payable 535 92. Debit insurance expense for x months in the new policy period credit accrued payables 2. This will result in 225 being reported as the company s health insurance expense for that pay period. We need to book the health insurance journal entries for june.
An alternative would be to credit a liability e g employee withholdings for insurance for the 75 withheld from the employee. 2 000 will be subtracted from the prepaid account and is shown as an expense in the income statement for that reporting quarter. 1 payroll journal entry wage payroll and insurance. On december 31 the company writes an adjusting entry to record the insurance expense that was used up expired and to reduce the amount that remains prepaid.
Prepaid expense acts like an asset and according to the. The income statement for the quarter ending will show an expense of 2 000 under the line item of insurance expense. Accounts payable 1 000 july 2017 cr. Auto reverse the entry on the first of the next month 3.
Date account names debit credit 3 1. When the asset is charged to expense the journal entry is to debit the insurance expense account and credit the prepaid insurance account.
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