Insurance Premium Journal Entry
Prepaid insurance journal entries.
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 a c nominal a c its the expense of the company therefore its debited. A basic insurance journal entry is debit. After the payment you make the following journal entry at the end of each period.
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. Prepaid salaries 25 000. Not all insurance payments premiums are deductible business expenses. 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 wages 10 000. Since you are using cash your cash will fall and. To cash or bank account how to record insurance premium in tally erp 9. Some insurance payments can go on to the profit and loss report and some must go on the balance sheet.
Using the below trial balance and additional information provided along with it. Journalize the prepaid items in the books of unreal corp. Prepaid insurance journal entry. What is the journal entry for insurance premium payment of a company.
Prepaid insurance dr 10000 bank cr 10000 every month end insurance dr 834 prepaid insurance 834. Prepaid insurance is usually charged to expense on a straight line basis over the term of the related insurance contract. This is accomplished with a debit of 1 000 to insurance expense and a credit of 1 000 to prepaid insurance. The company has paid 10 000 of an insurance premium for the whole year at the beginning of quarter one.
When the asset is charged to expense the journal entry is to debit the insurance expense account and credit the prepaid insurance account. Bank for payments to an insurance company for business insurance. Premium ledger under investments head. Insurance premium a c dr to bank a c.
Recording journal entries for insurance premiums are also similar. Prepaid insurance a xxx for unexpired policy. 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. Is this answer correct.
Insurance expense p l xxx cr. Bank a c personal a c where banker as payer he gives money to the insurance company therefore its credited journal entry. 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. The journal entry would increase supplies and decrease cash.
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