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View Full Version : Accounting for Key Person life insurance


nubeancounter
Dec 5, 2008, 12:40 PM
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
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