Journal Entry for Cheque Given for Insurance Premium

The transaction of paying for insurance premium through cheque needs to be recorded in the books of accounts. The journal entry for the same will involve the following steps:

Step 1: Identify the accounts involved
- Bank Account: The bank account from where the cheque is issued
- Insurance Expense Account: The account that records the insurance premium paid

Step 2: Determine the amount of the transaction
- The amount of the insurance premium paid through the cheque

Step 3: Record the journal entry
- Debit Insurance Expense Account with the amount of the insurance premium paid
- Credit Bank Account with the same amount

HTML formatted journal entry:

Journal Entry for Cheque Given for Insurance Premium

Debit Insurance Expense Account xxx
Credit Bank Account xxx

Explanation:
- The insurance expense account is debited to record the payment made towards the insurance premium.
- The bank account is credited as the payment is made through a cheque, thereby reducing the balance of the bank account.

Example:
Suppose ABC Ltd. makes a payment of $5,000 towards the insurance premium through a cheque. The journal entry for the same will be as follows:

Debit Insurance Expense Account $5,000
Credit Bank Account $5,000

This journal entry will record the payment of the insurance premium in the books of accounts of ABC Ltd.

Insurance premium a/c ......Dr. To bank a/c ( Being insurance premium paid by cheque)