Question

What will be the journal entry of paid Life insurance premium Rs 5000

Answer 1

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 Any amount withdrawn from business for "personal use" is treated as drawing.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

Answer 2

Answer:

Drawings A/c...........Dr. 5000 --

To Cash A/c -- 5000