Hi Kevin, if the refund is for an over payment of the premium I would post to the expense account to reflect the true cost of premiums paid. Does it matter. Prepaid insurance is usually charged to expense on a straight-line basis over the term of the related insurance contract. Insurance Company's Claim A/c Dr.8,000 Loss by fire A/c Dr.2,000 To Goods/Stock A/c 10,000 (Being goods lost by fire and insurance company's claim Prepaid Insurance Journal Entry. Insurance Company's Claim A/c Dr.8,000 Loss by fire A/c Dr.2,000 To Goods/Stock A/c 10,000 (Being goods lost by fire and insurance company's claim When the claim is agreed, set up an accounts receivable due from the insurance company. ... Any insurance claim receipts must be accounted for separately rather than being adjusted in the carrying amount of the asset. When the insurance proceeds become fixed and determinable, you record the following journal entry to record the gain. There will always be 2 or more acconts in atransaction. Receive the cash from the insurance company. How to pass the entries. One I am going to repair and the other I am not. Any other proceeds from disposing of the inventory items will also be debited to Cash.
Insurance claim Reverse the entries against the settlement amount.
But, if is is a return of premium, then yes, it should be credited against the orginal expense account. The cash surrender value of the life insurance policy is no longer an asset, so its balance must be removed from the B/S. Instead of debiting Cash as we did in the previous scenario, we debit Accounts Receivable.

A) From your subject, you could have two types of losses to account for: 1. Business Interruption and 2. The journal entry … Accounting Treatment of Stolen or Lost Assets & Insurance Compensation Question. To illustrate, assume the company partially insured the building and received $22,000 from the insurance company. The Motor Garage company issue a bill of Rs.10000.00 for damage repairng charges. How to pass entry when the Motor car accident is done & motor car is send to the garage for repairing. Should I deposit the check in the same EXPENSE category listed below. If claim is received the journal entry is aa follows: Cash/bank a/c dr. To insurance claim receivable a/c. The money received from an insurance company for a claim involving a loss on inventory stock is debited to Cash. When the asset is charged to expense, the journal entry is to debit the insurance expense account and credit the prepaid insurance account.

Basic Insurance Accounting – Selected Topics Page 3 of 24 Example 1 - where reserving is based at inception on actual claim activity Assume • All claims are reported within 4 months of the loss event. The accounting treatment for all three types of entities is … • Earned premium for the month is $100. Cash comes in so debited.

On December 31, the company writes an adjusting entry to record the insurance expense that was used up (expired) and to reduce the amount that remains prepaid. Accounting for insurance proceeds November 22, 2019 / Steven Bragg When a business suffers a loss that is covered by an insurance policy , it recognizes a gain in the amount of the insurance proceeds received. This is accomplished with a debit of $1,000 to Insurance Expense and a credit of $1,000 to Prepaid Insurance. Prepaid Insurance: Adjusting the Entry Suppose you buy $1,500 in errors and omissions insurance that is good for the next 12 months. When the insurance company pays out for your claim, you get the money—or at least some of it—back.