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    nubeancounter's Avatar
    nubeancounter Posts: 1, Reputation: 1
    New Member
     
    #1

    Dec 5, 2008, 12:40 PM
    Accounting for Key Person life insurance
    We just got our first policy. Should to total death benefit be recorded as a balance sheet transaction? What accounts do you use?

    Thanks,

    nubeancounter
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
    Ultra Member
     
    #2

    Dec 12, 2008, 08:55 PM

    When you purcahse an insurance policy the journal entry is:

    Debit prepaid insurance for the amount
    Credit Cash for the amount

    As the insurance is used the journal entry is:

    Debit Insurance Expense for the amount used
    Credit Prepaid insurance for the amount

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