Chandra Shekhara .B (Finance Professional) (53 Points)
03 December 2012Hi Dear friends i have query Please help me out
How to pass the closing entry for the below expenses..?
Insurence amount paid 60000 on 30/9/2012 its valid til 30/9/2013, how we'l pass the closing entry while closing the books of accounts & for next year how wil pass the entrty close the insurance a/c.. Please rply ASAP
CA. Subhash Dangi
(Chartered Accountant)
(1784 Points)
Replied 03 December 2012
Pass the closing entry as under if entire premium debited to Insurance expense account.
Prepaid Insurance Acoount - Dr. Rs.30000
To Insurance (Expns) Rs.30000
(Being insurance for the period from 01.04.2013 to 30.09. 2013 is taken to Prepaid insurance A/c - Rs.5000X6 months)
Next year accounts, you reverse the entry.
Insurance (Expns) -Dr Rs.30000
To Prepaid Insurance Acoount - . Rs.30000
(Being reversal of prepaid insurance ......)
Nithin Chettoor
(Assistant Manager)
(388 Points)
Replied 03 December 2012
Insurance expenses A/c Dr. 30000
Prepaid Insurance Premium A/c Dr 30000
To Bank A/c 60000
Profit & Loss A/c Dr 30000
to Insurance expenses A/c 30000
Prepaid insurance premium will go to balance sheet under current assets and next year on 30/09/2013, should pass the entry.
Insurance Expenses A/c Dr 30000
to Prepaid Insurance Premium 30000
Pulkesh Mehta
(Chartered Accountant)
(243 Points)
Replied 03 December 2012
I think Sai Prasanna Kumar is not right because insurance exp. paid is Rs .60000 out of which Rs. 30000 is prepaid in F.Y.2012-13.
Entry at the time of payment
Insurance Exp. Dr. 60000
To Cash/Bank 60000
On 31.03.13
1. Prepaid Exp. A/c Dr. 30000
To Insurance Exp. 300000
2. Profit & Loss Dr. 30000
To Insurance Exp. 30000
On 01.04.2013
Insurance Exp, Dr. 30000
To Prepaid Exp. 30000
CA. Subhash Dangi
(Chartered Accountant)
(1784 Points)
Replied 03 December 2012
Pulkesh,
No need to pass 2nd entry as on 31.03.2013
2. Profit & Loss Dr. 30000
To Insurance Exp. 30000
as the insurance expenses is a P& L item i.e, head of account.
Chandra Shekhara .B
(Finance Professional)
(53 Points)
Replied 03 December 2012
Thank You so much to all
satish kumar voleti
(A.C.A., (ICWAI))
(1686 Points)
Replied 03 December 2012
TOTAL INSURANCE PAID IS RS. 60000
FINANCEIAL YEAR 2012-13
Insurance Pre -Paid(prepaid Expenses CA Group)DR. 60000
to Bank A/c CR. 60000
Insurance Expenses A/c DR. 30000
to Pre - Paid Insurance Cr. 30000
FINANCEIAL YEAR 2013-14
Insurance Expenses A/c DR. 30000
to Pre - Paid Insurance Cr. 30000
Gunjan Tulsyan
(Article)
(222 Points)
Replied 03 December 2012
Your Query has a simple answer:
1. Insurance A/c Dr. 30000
Prepaid Insurance A/c Dr. 30000
To Bank/ Cash A/c 60000
and after passing this on 1st April,2013 pass a reversal entry as follows:
2. Insurance A/c Dr. 30000
To Prepaid Insurance A/c 30000
Hope your doubt is clarified..!!
Ramarao Gullipalli
(Dy.Manager-Finance & Accounts)
(99 Points)
Replied 04 December 2012
Your Query has a simple answer:
1. Insurance A/c Dr. 30000
Prepaid Insurance A/c Dr. 30000
To Bank/ Cash A/c 60000
and after passing this on 1st April,2013 pass a reversal entry as follows:
2. Insurance A/c Dr. 30000
To Prepaid Insurance A/c 30000
Hope your doubt is clarified..!!
I agree with Mr.Gunjan Tulsyan
S Menon
(Student)
(85 Points)
Replied 04 December 2012
According to me the best possible way of accounting this will be as below;
At the time pf making payment;
Prepaid Insurance A/C...Dr 60,000
To Bank 60,000
Then monthly, recognize the expense part as;
Insurance A/C..............Dr 5,000
To Prepaid Insurance A/C 5,000
Thereby at the end of the F.Y you will have the right balance in the prepaid account to carry forward to next year.
(My answer is purely based on how we used to do it practically in the Corporate world)..
Thanks
S Menon
CA Prashant Nariya
(CA)
(49 Points)
Replied 11 September 2019
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