Insurance Premium Refund Journal Entry
The following particulars are ascertained from the book and records.
Insurance premium refund journal entry. After the payment you make the following journal entry at the end of each period. For example a business buys one year of general liability. The journal entry would increase supplies and decrease cash. 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.
9660 purchases during the year rs. Using the below trial balance and additional information provided along with it. When the asset is charged to expense the journal entry is to debit the insurance expense account and credit the prepaid insurance account. Insurance premium a c dr to bank a c.
If the refund is from an insurance claim then i would do as you suggested with the sales receipt. An asset of mr. Since you are using cash your cash will fall and. Recording journal entries for insurance premiums are also similar.
Hi kevin if the refund is for an over payment of the premium i would post to the expense account to reflect the true cost of premiums paid. Insurance expense p l xxx cr. Insurance premium related to next year transferred to prepaid insurance premium account example journal entry for prepaid salary or wages. You need to create a journal entry for the payroll deductions to offset the total cost of the health insurance premium paid.
Insurance premium a c nominal a c its the expense of the company therefore its debited. X s was destroyed by fire on 1 08 09. Prepaid wages 10 000. Record the net payroll amount as a decrease to the business checking account or business payroll account if you use a separate bank account for issuing payroll checks.
Thus the amount charged to expense in an accounting period is only the amount of the prepaid insurance asset ratably assigned to that period. For example journal entry 1 je 1 on left for a 1 000 return premium with a 10 percent sales commission currently creates three accounting records this journal entry shapes balance sheet bl. Insurance claim journal entry question. Journalize the prepaid items in the books of unreal corp.
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. A basic insurance journal entry is debit. Prepaid insurance a xxx for unexpired policy. Stock at count as on 31 3 08 rs 18948 stock at cost on 31 3 09 rs.
Bank for payments to an insurance company for business insurance. Some insurance payments can go on to the profit and loss report and some must go on the balance sheet.
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