When you make a prepaid rent or unexpired insurance journal entry, you report the money as an asset, entering it in a prepaid insurance account in the books. The entry is to debit Insurance Receivable and credit Direct Premium Income The Company has received the outstanding premiums receivable of $24,000,000. Accounting for the Life Insurance Expense FASB Technical Bulletin 85-4 (Also See EITF 06-5) Life Insurance Entries (based on Executive Variable Universal Life Sample Model) Balance Sheet Income Statement DR CR DR CR 1. Prepaid Insurance: Adjusting the Entry. Learn everything you need to know about insurance expense: definition, classification and presentation, journal entries, and examples. Insurance expense refers to the expired premium paid by a business to an insurer. Suppose you buy $1,500 in errors and omissions insurance that is good for the next 12 months. (f) Goods loss by theft Rs 5,000. (1,000) When the health insurance bills arrive, we will book the expenses based on the invoices. When the claim is agreed, set up an accounts receivable due from the insurance company. Dental Insurance Exp 1,000 June-2017 Cr. (d) Goods loss by fire Rs 50,000 and insurance company accepted full claim. (c) Goods loss by fire Rs 40,000 insurance company does not accepted any claim. A set of accrual or deferral journal entries with the corresponding adjusting entry provides a complete picture of the transaction and its cash settlement. Cash (A) XXX (for the cash paid) After the payment, you make the following journal entry at the end of each period: Dr. Insurance Expense (P/L) XXX Cr. The process is split into three stages as follows: Write off the damaged inventory to the impairment of inventory account. June-2017 Dr. Required: Journal entries SOLUTION: Journal Entry for American Style In addition to the gross pay and withholding in the previous payroll journal entries, ABC Company has incurred additional payroll liability expenses that must be recorded. Dr. Prepaid Insurance (A) XXX (for unexpired policy) Dr. Accounts Payable (L) XXX (for the entire balance to make it zero) Cr. The journal entries below act as a quick reference for accounting for insurance proceeds. This is accomplished with a debit of $1,000 to Insurance Expense and a credit of $1,000 to Prepaid Insurance. (e) Goods loss by fire Rs 60,000 insurance company accepted only 60% claim. 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. 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