18+ Insurance Expense Prepaid Insurance Journal Entry Background. So, the x ltd will recognize the $ 60,000 rent expense and the $12,000 insurance expense as the prepaid insurance in the monthly financial statements of the company because the amount is paid in advance benefit of which is not yet. The company usually purchases insurance to protect itself prepaid insurance and cash are both balance sheet items.
The following journal entries will be recorded by the company:
Definition of payment for insurance a company's property insurance, liability insurance, business interruption insurance, etc. When premiums are paid in advance, they should be recorded as a prepaid expense and amortized over the coverage period. Rent as a prepaid expense? A) to record the premium payment on april 15, 20x0 however, this time the company recorded the entire amount of prepaid insurance of $24,000 as insurance expense in the income statement at the time of the premium payment.
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