Abhishek Selvam O (374 Points)
15 September 2020
prasad Nilugal
( GST Practitioner & Accounts )
(14163 Points)
Replied 15 September 2020
You have show oping Debit balance as prepaid Insurance account as on 1/4/2020 , then if 25000/- prepaid for 3 months ( April , May . June ) then in each month you pass entry as follows
Insurance Expense A/c Dr
To Prepaid insurance A/c Cr
( prepaid Insurance Exp adjusted )
Kutub Hamid
(118 Points)
Replied 10 October 2020
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 10 October 2020
Nice to understand both the answers.
First book it like:
Prepaid insurance dr.asset
To Bank a/c asset
then when ever it expires pass the above entries:
Insurance expense dr, income statement
To Prepaid insurance Cr. Asset reduced.
What does the insurance contracts say about this? Do we have to use purchase account or debit bank directly?
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