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