Prepaid expense

Hi,

If A ltd co. purchase insurance policy (vehicle) on 13th may'09 for rs. 17000 for one year then wht is the accounting treatment for this.

Thanks in advance.

Regards,

Ajay

Replies (12)

When policy taken

Insurance on Vehicle      Dr

To Bank/Cash

 

and at the end of the year

P&L A/c         Dr.

Prepaid Insurance  A/c    Dr

To Insurance on Vehicle

As  per your question your company paid R s 17000/-  on 13 amy 2009.

 

Therefore entry wiil be  :-


         insurence account DR.     17000

                   To Bank /cash                          17000

 

At the year end :-

            Profit and loss DR.               14997.26

            Prepaid insurence DR.           2002.74

                      to Insurence on vehicle                17000

Agreee with both of the above..

Agree with Khan..

Agree with CA Khan.

Dear All,

Thanks a lot.

Can i do the consolidate entry like as given below,

Insurance a/c -dr     14997.26

 Prepaid ins a/c-dr     2002.74

To bank/cash a/c                             17000

Plz advice.

Thanks & Regards

Agreed with CA Khan.......!!!

Originally posted by : CA KHAN AURANGZAIB

As  per your question your company paid R s 17000/-  on 13 amy 2009.

 

Therefore entry wiil be  :-


         insurence account DR.     17000

                   To Bank /cash                          17000

 

At the year end :-

            Profit and loss DR.               14997.26

            Prepaid insurence DR.           2002.74

                      to Insurence on vehicle                17000

agree with this

Agreed  with Khan's accounting treatment

HOPE THE QUERY IS RESOLVED

 

CHECK LATEST NOTES AND AMENDMENTS FOR CA FINAL


/forum/ca-final-may-2010-amendments-and-notes-for-all-subjects-75890.asp

Entry shd be like this:- Insurance Exp-   Rs. 15038.46

                                         Prepaid  Exp-      Rs.   1961.54

                                        Bank/Cash           Rs.                       17000.00

(Coz TTL Days r 364 days)

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