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Pass a journal entry - paid by cheque rs. 6000 as fire insurance premium for a period of 12 months sarting 1st july 2017.Financial year closes on 31st march every year?
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Pass a journal entry - paid by cheque rs. 6000 as fire insurance premi...
(1).... Insurance Premium Paid for 12 monthsInsurance A/c Dr Rs 6,000To Bank A/c Rs 6,000(being Insurance premium paid)(2).... Prepaid Insurance Premium for 3 monthsPrepaid Insurance A/c Dr Rs 1500To Insurance A/c Rs 1500(Being Insurance premium paid in Advance)
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Pass a journal entry - paid by cheque rs. 6000 as fire insurance premi...
Journal Entry for Payment of Fire Insurance Premium


On July 1, 2017, we paid a fire insurance premium of Rs. 6000 for a period of 12 months. The financial year ends on March 31 every year. Below is the journal entry for this transaction:


Journal Entry



  • Debit: Fire Insurance Expense - Rs. 6000

  • Credit: Bank Account - Rs. 6000



Explanation


The above journal entry is a simple transaction where we paid for fire insurance coverage for the next 12 months. The entry has two parts, a debit and a credit, which are explained below:


Debit: Fire Insurance Expense - Rs. 6000


Fire Insurance Expense is an expense account that records the cost of insurance coverage against fire damage. In this transaction, we paid Rs. 6000 for 12 months of coverage, which is recorded as an expense. The debit entry increases the expense account balance, which reduces the net income.


Credit: Bank Account - Rs. 6000


The credit entry records the payment made for the fire insurance premium. We paid the amount through our bank account, which is credited for an equal amount. The credit entry increases the bank account balance, which is an asset account.


Conclusion


The payment of fire insurance premium is a routine transaction for businesses to protect their assets from fire damage. The journal entry for this transaction is simple and involves the Fire Insurance Expense and Bank Account. It is important to record such transactions accurately to maintain the financial records and comply with the accounting standards.
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Study the following hypothetical transactional detail of Mr. Keshav and answer the given questions:On 31st March, 2019 the bank column of the Cash Book of Mr. Keshav disclosed an overdraft balance of ₹8,300. On examining the cash book and bank statement you find that:• Cheques were deposited into the bank for ₹16,000 but of these cheques for ₹4,600 were cleared and credited in April 2015.• Cheques were issued for ₹7,500 out of which cheques for ₹6,000 had been presented for payment in March 2019.• In March Mr. Keshav had discounted with a bank a bill of exchange for ₹10,000 and had entered this amount in the Cash Book, but the proceeds credited as shown by the Passbook, amounted to ₹9,600.• No entry is made in the Cash Book of an amount of ₹6,100 directly deposited by a customer in the bank accounts.• Bank Column of the payment side of the Cash Book was undercast by ₹1,000.• Payment of Insurance premium of ₹2,000 and receipt of insurance claim of ₹8,000 appear in the Passbook but not entered in the Cash Book.• A cheque for ₹3,500 issued to Mr. Kapil was omitted to be recorded in the Cash Book.• A cheque for ₹2,800 issued to Mr. Darshan was entered in the cash column of the Cash Book.Where will the payment of insurance premium be recorded?

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Pass a journal entry - paid by cheque rs. 6000 as fire insurance premium for a period of 12 months sarting 1st july 2017.Financial year closes on 31st march every year?
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Pass a journal entry - paid by cheque rs. 6000 as fire insurance premium for a period of 12 months sarting 1st july 2017.Financial year closes on 31st march every year? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Pass a journal entry - paid by cheque rs. 6000 as fire insurance premium for a period of 12 months sarting 1st july 2017.Financial year closes on 31st march every year? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Pass a journal entry - paid by cheque rs. 6000 as fire insurance premium for a period of 12 months sarting 1st july 2017.Financial year closes on 31st march every year?.
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