Question

Goods worth rs 20000 were insured for rs 15000 and annual insurance premium @ 5% has been paid on them

Answer 1

Answer:

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Answer 2

Journal Entry for the same

Explanation:  

Insurance Premium A/c                     ...Dr. 750  

                      To Cash A/c                                 750  

(Being goods insured for Rs. 15,000 and insurance premium paid)  

Working Notes:  

Insurance Premium = 15,000 × 5%  

                                 = Rs. 750

An insurance premium is the amount of money an individual or business must pay for an insurance policy. Insurance premiums are paid for policies that cover healthcare, auto, home, and life insurance.  

Journal Entries are the building blocks of accounting. It records business transactions in the accounting books of a business.