Question

a company pays 12000 in advance for i surance for the upcoming year.pass journal entry​

Answer 1

Answer:

prepaid insurance a/c

to insurance a/c

(being premium paid in advance )

Explanation:

prepaid and outstanding expenses

Answer 2

Answer:

Answer:

prepaid insurance a/c

to insurance a/c

(being premium paid in advance )

Explanation:

prepaid and outstanding expenses

Explanation:

Journal entry for the life insurance paid will be:

Drawings A/c Dr.5000

To Cash/bank A/c Cr.5000

(Being life insurance paid from cash/bank account, drawing account is debited because the insurance premium is paid for a person who is not related to business transaction. Any amount withdrawn from business for "personal use" is treated as drawing. Cash/bank account is credited because as per golden rules of accounts, for real accounts entries passed will be credit what goes out.)