a**********r
发帖数: 498 | 1 Sorry, I can't type Chinese right now.
Last month A company received one insurance invoice $12,000, but didn't pay
it. AP made the entry for this transaction: Dr. Prepaid Insurance $12000
Cr. AP $12000.
At end of last month, A company should expense $1,000 for one month
insurance expense: Dr. Insurance expense 1,000 Cr. Prepaid Insurance 1,
000
Is that right? Is there other adjusting entry should make at the end of last
month?
Thanks! | E****A
发帖数: 376 | 2 I think it's right, when:
1. it's a one year insurance starting from "last month"
2. no prior period insurance, otherwise, the company should amortize that,
too.
3. disregarding tax impact
any other opinion?
pay
1,
last
【在 a**********r 的大作中提到】
: Sorry, I can't type Chinese right now.
: Last month A company received one insurance invoice $12,000, but didn't pay
: it. AP made the entry for this transaction: Dr. Prepaid Insurance $12000
: Cr. AP $12000.
: At end of last month, A company should expense $1,000 for one month
: insurance expense: Dr. Insurance expense 1,000 Cr. Prepaid Insurance 1,
: 000
: Is that right? Is there other adjusting entry should make at the end of last
: month?
: Thanks!
| a**********r
发帖数: 498 | 3 1. Yes, it's a one year insurance starting from "last month".
2. No prior period insurance.
My boss said I should make another adjusting entry: Dr. AP (another account
different from that one used by AP) $11,000 Cr. Prepaid Insurance $11,
000
Her reason is that the payment hasn't paid by the end of last month. Then
this month a reverse entry should be made: Dr. Prepaid Insurance $11,000
Cr. AP $11,000.
Anyway, I will follow her. I just want to verify if I'm right. | f*******i
发帖数: 459 | 4 I don't think your boss is quite right because she zeroed out the liability. If
she is not comfortable of using pre-paid account, you can use some other
asset account. However, there is no effect on F/S in either way.
account
【在 a**********r 的大作中提到】
: 1. Yes, it's a one year insurance starting from "last month".
: 2. No prior period insurance.
: My boss said I should make another adjusting entry: Dr. AP (another account
: different from that one used by AP) $11,000 Cr. Prepaid Insurance $11,
: 000
: Her reason is that the payment hasn't paid by the end of last month. Then
: this month a reverse entry should be made: Dr. Prepaid Insurance $11,000
: Cr. AP $11,000.
: Anyway, I will follow her. I just want to verify if I'm right.
| a**********r
发帖数: 498 | 5
liability. If
Thanks!
That's what I was thinking. When company received the invoice, the total
amount of invoice $12,000 has existed as liability. In her way, the related
liability is just $1,000.
She said auditor would not like my way. So I need the opinion from
accounting experts here.
【在 f*******i 的大作中提到】
: I don't think your boss is quite right because she zeroed out the liability. If
: she is not comfortable of using pre-paid account, you can use some other
: asset account. However, there is no effect on F/S in either way.
:
: account
:
|
|
