Smart Unexpired Insurance In Balance Sheet

Any insurance premium costs that have not expired as of the balance sheet date should be reported as a current asset such as Prepaid Insurance.

Unexpired insurance in balance sheet. Shown on the liabilities side of the Balance Sheet. Not all insurance payments premiums are deductible business expenses. Unexpired insurance or prepaid insurance must be shown on the assets side of the Balance.

Unexpired insurance premiums are reported as Prepaid Insurance an asset account. The Insurance Expense account has 600 debit in the account and it is supposed to have. In other words this policy costs you 100 per month which is prepaid in advance.

Joe asks Marilyn where the remaining 1000 of unexpired insurance premium would be reported. Unexpired Insurance asset account the adjusting journal entry requires a debit to Unexpired Insurance asset in the amount of 550 to make the balance in the Unexpired Insurance asset account correct. The costs that have expired should be reported in income statement accounts such as Insurance Expense Fringe Benefits Expense etc.

Two months later on Dec 31 youd figure that 200 of your original payment has now expired Nov and Decs portion and youve still got 1000 of unexpired premium. With 700 worth of unexpired insurance youd report a 700 prepaid insurance asset. If unexpired insurance appears in the Trial Balance it should be.

Insurance is called unexpired insurance when an amount is paid by a company for insurance premium and its consequence is available until it covers the period. So you can think it as a prepaid payment. The Right answer of.

Assets Liabilities shareholders equity. Prepaid insurance is deducted from the insurance premium expenses account in profit loss account and shown in balance sheet as current assets. A basic insurance journal entry is Debit.