Insurance Premium Journal Entry
Insurance premium related to next year transferred to prepaid insurance premium account example journal entry for prepaid salary or wages.
Insurance premium journal entry. Recording journal entries for insurance premiums are also similar. After the payment you make the following journal entry at the end of each period. Prepaid insurance journal entry. Insurance premium a c dr to bank a c.
This is accomplished with a debit of 1 000 to insurance expense and a credit of 1 000 to prepaid insurance. What is the journal entry for insurance premium payment of a company. Prepaid insurance a xxx for unexpired policy. Prepaid wages 10 000.
Premium ledger under investments head. Since you are using cash your cash will fall and. 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. Not all insurance payments premiums are deductible business expenses.
Some insurance payments can go on to the profit and loss report and some must go on the balance sheet. When the asset is charged to expense the journal entry is to debit the insurance expense account and credit the prepaid insurance account. What is the journal entry for insurance premium payment of a company. Is this answer correct.
Bank for payments to an insurance company for business insurance. Bank a c personal a c where banker as payer he gives money to the insurance company therefore its credited journal entry. Using the below trial balance and additional information provided along with it. Insurance premium a c nominal a c its the expense of the company therefore its debited.
If you are paying cash you are again increasing one asset account at the expense of the other because both cash and prepaid insurance are assets. To cash or bank account how to record insurance premium in tally erp 9. Prepaid insurance journal entries. Journalize the prepaid items in the books of unreal corp.
The company has paid 10 000 of an insurance premium for the whole year at the beginning of quarter one. Cash or bank ledger under cash in hand or bank accounts head. If you want to pass voucher entry for such a transaction in tally erp 9 accounting software then you need to have the following ledgers in your company. A basic insurance journal entry is debit.
Let s say xyz company who needs to pay its employee liability insurance for the whole of a fiscal year ending 31 december 2018 amounted 10 000. Prepaid insurance dr 10000 bank cr 10000 every month end insurance dr 834 prepaid insurance 834. When you pay the remainder of the insurance premium and total a p dr prepaid insurance remaining number of months dr a p total unpaid insurance to date. Insurance expense p l xxx cr.
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