Accounting – 4.3 Other payables and other receivables | e-Consult
4.3 Other payables and other receivables (1 questions)
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Journal Entry (31st December):
Debit: Insurance Expense £2,500
Credit: Prepaid Insurance £2,500
Explanation: This entry records the insurance expense incurred during the period. The Insurance Expense account is debited, and the Prepaid Insurance account is credited to reduce the prepaid balance.
Ledger Accounts:
| Prepaid Insurance |
Debit
- Initial Balance: £12,000
- Credit (Insurance Expense): £2,500
Credit
- Balance: £9,500
| Insurance Expense |
Debit
- £2,500 (Credit from Prepaid Insurance)
Credit
- Balance: £2,500