[linyoke]

How do you record in journal entries if you only receive your insurance policy but not yet receive any invoice and the automatic payment will only go through next month.

[morgaine300]

Depends on whether you actually have any coverage yet or not. When I haven't received my bill and haven't paid anything yet, I have no insurance -- I get the bill a good month in advance and pay it right before it renews. Therefore if I have no bill yet, I have no (new) coverage yet.

If the coverage hasn't started and you haven't paid anything, you have no entry to make. If by having received the "policy" you just mean that nice booklet explaining all about your insurance, then all you really have is an agreement about something that won't happen until the future.

I'm not sure I've ever seen insurance for which coverage starts before you pay for it, except for maybe a difference of a few days until they can get a new policy bill to you, or when renewing an already-existing policy. (Since there's usually a grace period.) If you really are covered this month, you can always debit the insurance expense and credit a payable, then when the bill comes, take the difference and stick it into Prepaid Insurance for the future portion. If you only adjust Prepaid Insurance and Insurance Expense at the end of the year anyway, I wouldn't bother with it until you pay the bill

[linyoke]

The policy start cover from 3rd Jan and the company has not receive any invoice yet and the payment will only go through next month. It will be a monthly automatic payment.

[morgaine300]

That's a little odd. Are you sure that next payment is not for the following period rather than covering a past period? Insurance is generally paid in advance. No insurance company I've seen has ever covered me/us and not billed for that many months.

But let's assume you're correct for the moment. If you want your monthly statements to be correct, you can be charging that to insurance expense each month and sticking into a payable. Once it's paid, then remove it from the payable. (This is assuming an accrued basis.)

If you're only concerned about everything being ship-shape for year-end statements, you can dump the entire thing into insurance expense when you get the bill. The idea there being that as long as it's in the correct account for the year-end statements, then it's OK.

[linyoke]

Thank you so much for your help.

:)

[linyoke]

By the way, is a new policy, this is why I am confuse of how to record it as the invoice has not arrive yet when I do the closing month end. Thanks again for your help.