Question

UT SOIU
Paid for Life Insurance Premium (self) journal entries kyahoga​

Answer 1

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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 Any amount withdrawn from business for "personal use" is treated as drawing.

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Answer 2

Answer:

Journal entry for the life insurance paid will be

Drawing A/C Dr. 5000

To cash/bank A/C Cr. 5000

Being life insurance paid from cash/bank account , drawing amount is debited because the insurance premium is paid to a person who is not related to business transaction . Anys amount withdraw 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 .

Explanation:

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