Abhishek Selvam O (374 Points)
15 September 2020
prasad Nilugal
( GST Practitioner & Accounts )
(14850 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?
CAclubindia
