ACCOUNTING QUESTION
By USMANQATAR •
hai,, i have one qestion relating to accounts,one company paid one cheque to their insurence premium in 2007 , but this cheque not yet debited by company bank account in 2008,what the entry should i make to adjust this ?
debit-bank account
credit- other income... is it ok ?????
there's something strange with the question... i can still remember when i was in college that the use of words like "by" and "to" really make a difference in different scenarios... for example, the phrase "by company bank account" instead of "to company bank account" will make the question understandable...
NPA , I DONT THINK IT IS A BASIC ACCOUNTING, I GOT 10 DEFFERNECE ANSWERS
Hi
You will credit to supplier account / Insurance company account. Since this is 1 year old they can not deposit again. you have issue a another cheque.
Hope i answered your question.
Mansoor.
If you don’t want to show in your Reconciliation statement then Fireyangelinthesky is 100% right go with Fireyangelinthesky answer
No needs to pass any entry, show in your Reconciliation statement as cheque issued but not cleared
When Cheque will get clear pass
Dr. Insurance Co. Payable
Cr. Bank
Dear all correct me if I am wrong
cat.inc..this is common here in ME.Their CV shows a lot of experinces,masteral degree etc.but in actual work they are zero.they are good only in talking.same to some doctors..we call them doctor panadol.
Pinoyaaccountant.
How long you will show in the bank reconcilation account ?
My answer will be,
Year 2007 entry :
debit insurance
credit accruals accounts.
when the company debited the cheque, the new entry will be:
credit bank
debit the accruals accounts
As simple as that!!
Anyway , please check with the insurance company what is going on because i believe you need to re-issue a new cheque for replacement since the validity of the cheque is only 6 mths (Not sure in qatar)..
All the best..
I hope Fireyangelinthesky is correct.
yup, i agreed with fieryangelinthesky..
that should be the correct entry..
You are an accountant I cannot believe that you do not know such basic accounting
Dr the Insurance Expence
Cr Accrual Account
When the Cheque Clears
Dr the Accrual Account
Cr Bank
Pinoy accountant...You are WRONG..
Debit Bank and Credit Insurance Expense. Coz your insurance expenses was reduced for the year 2007. Simultaneously, pass a provision entry to record the insurance expense of 2007 to take care of the unforseen claim arising from insurance company.
To fieryangel in the Sky:
I agree not.
On the Bank Reconciliation issue, you do not need to do Adjusting Entries on the Outstanding Cheques.
It will be a redundant entry if you need to adjust back to the book the corresponding Cash you have entered before.
Wat was your original journal entry for the issuance of cheque? Does your company is under accrual or cash basis accounting?
ACCRUAL - I assumed that the corresponding insurance expense was already recoginized and recorded.
Set up expense:
Dr. Insurance expense xxx
Cr. Insurance Co. Payable xxx
Issuance of check:
Dr. Insurance Co. Payable xxx
Cr. Cash in Bank xxx
Since the check is still oustanding (if it is already a staled check) the entry should be:
Dr. Cash in Bank xxx
Cr. Insurance Co. Payable xxx
IF CASH BASIS:
Dr. Cash in Bank xxx
Cr. Insurance expense xxx
Hoping that I answered your question correctly.
Debit Bank Account and Credit Insurance expenses A/c
Debit Bank Account and Credit Insurance expenses.
You do not need to do any adjusting entry since it will be just recorded in the book as Advance Payment to Supplier.
Is the Insurance Premium payment already accrued or some portion has advance payment already?