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Unit 4: Final Accounts
Debit the Asset A/c Prepaid Non Life insurance Balance sheet Notes
Credit the expense account (to downsize the amount actually paid 15 months to 12 months for
one year) will be deducted from the total amount shown in the debit side of P&L Account.
Journal entry for the first transaction.
Dec 31,2005 Insurance premium paid 1,500.
The journal entry for the insurance premium paid is as follows:
Dec 31 Insurance premium A/c Dr 1,500
To Cash A/c Cr 1,500
(Being the insurance premium paid)
The journal entry for the pre-payment of insurance premium is as follows:
(or)
The journal entry for the outstanding rental amount is as follows:
Dec,31 Non-Life insurance Prepaid A/c Dr 300
To Insurance premium A/c Cr 3,00
Being the insurance premium pre-paid to be treated as asset
How many accounts are involved in the transactions ?
1. Cash A/c
2. Non-Life insurance
3. Insurance premium A/c
Dr Cash A/c Cr
Date Particulars Date Particulars
To Balance c/d 1,500 Dec 31 By Insurance Premium 1,500
1,500 1,500
By Balance B/d 1,500
Dr Non-Life Insurance Prepaid A/c Cr
Date Particulars Date Particulars
Dec 31 To Insurance premium 300 By balance c/d 300
300 300
To balance c/d 300
Dr Insurance premium A/c Cr
Date Particulars Date Particulars
Dec 31 To cash A/c 1,500 Dec 31 By Non life insurance Prepaid 300
By balance b/d 1,200
1,500 1,500
To balance c/d 1,200
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