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. The journal entries below act as a quick reference for accounting for insurance proceeds. (d) Goods loss by fire Rs 50,000 and insurance company accepted full claim. 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. 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. Suppose you buy $1,500 in errors and omissions insurance that is good for the next 12 months. The journal entry is completed this way to reverse the accrued revenue, while revenue entry remains the same, since the revenue needs to be recognized in January, the month that it … June-2017 Dr. (c) Goods loss by fire Rs 40,000 insurance company does not accepted any claim. Dr. Prepaid Insurance (A) XXX (for unexpired policy) Dr. Accounts Payable (L) XXX (for the entire balance to make it zero) Cr. When the claim is agreed, set up an accounts receivable due from the insurance company. Prepaid Insurance (A) XXX (for unexpired policy) Insurance Bookkeeping Entry Situations 17701 Cowan Suite 120A, Irvine CA 92614 Phone (949) 474-8500 Fax (949) 474-8510 www.liptzcpa.com The Company has direct written premiums of $24,000,000. Receive the cash from the insurance company. (1,000) When the health insurance bills arrive, we will book the expenses based on the invoices. Dental Insurance Exp 1,000 June-2017 Cr. 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. Accounts Payable (1,000) July-2017 Dr. Accounts Payable 1,000 July-2017 Cr. Learn everything you need to know about insurance expense: definition, classification and presentation, journal entries, and examples. The process is split into three stages as follows: Write off the damaged inventory to the impairment of inventory account. Prepaid Insurance: Adjusting the Entry. Required: Journal entries SOLUTION: Journal Entry for American Style Insurance expense refers to the expired premium paid by a business to an insurer. (e) Goods loss by fire Rs 60,000 insurance company accepted only 60% claim. (f) Goods loss by theft Rs 5,000. Dental Insurance Ex. Company Pays Premium Into Insurance Contract Life Insurance Premium Expense $100,000 Cash $100,000 2. 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