Insurance Journal Entry Example
The double entry would be to debit the bank account in the balance sheet and credit insurance in the profit and loss account.
Insurance journal entry example. The original payment of 800 covers june through september. When the asset is charged to expense the journal entry is to debit the insurance expense account and credit the prepaid insurance account. One month of xyz company s insurance expired in june.
Xyz company s employees earned 550 during june and are paid in july. This adjusting journal entry will be passed every month by the company for the next 12 months in order to prepare and present the correct monthly financial statement of the company after which the balance of prepaid rent and insurance account will become nil. Cr prepaid insurance 200.
Every transaction that is created will have two entries to the accounts. The adjusting entry on january 31 would result in an expense of 10 000 rent expense and a decrease in assets of 10 000 prepaid rent. Stock at count as on 31 3 08 rs 18948.
Example journal entry for prepaid insurance. Some insurance payments can go on to the profit and loss report and some must go on the balance sheet. If an adjustment is needed to the accounts then a journal will need to be produced.
For example a business buys one year of general liability. Bank for payments to an insurance company for business insurance. Insurance claim journal entry question an asset of mr.
Example of payment for insurance expense. Thus the amount charged to expense in an accounting period is only the amount of the prepaid insurance asset ratably assigned to that period. Dr insurance expense 200.
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