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Level 1

Insurance Claim Accounting Procedure: Minor Vehicle Repair

Please advise me on the correct accounting procedure:

 

Asset is a truck:

  • Asset account
    • Asset sub-account for Accum. Depreciation

 

The vehicle had a minor repair job done:

  • Insurance claim handler estimated the total to be 2000
    • Our deductible is 500
    • So insurer sent a check payable to our company in the amount of 1500
  • Auto repair shop total cost was 1800

 

Also, since the vehicle was damaged during non-business operations (it is an executive's vehicle, a 50% member of the LLC), any out-of-pocket costs were paid by that member.

 

So, the cash transactions that are applicable are (I have not entered any of these yet, just the bill from the repair shop for 1800):

1. A debit to our bank account for the 1500 check sent by insurer

2. A credit to our bank account for 1500 worth of the repair cost

3. A credit to the partner's capital account: current year contributions in the amount of 300

 

What is the correct way to go about recording this process in the books?

 

If you use account names like Insurer (debtor), Provisions for Insurance, etc. etc. PLEASE specify what type of account those are: Current Asset/Liability, Income, Expense, Other Income, Other Expense, etc.

 

I know there will be a gain of roughly 200 on the books.

 

1 Comment
Level 15

Insurance Claim Accounting Procedure: Minor Vehicle Repair

No there is no gain, the bill is 1800, the ins company paid 1500, leaving 300 to be paid by the company or the member responsible

 

Repairs to a fixed asset are just that, and they do not affect the asset value

 

the bill from the repair shop should use an expense account for car repairs, 1800


deposit the check (1500) from the ins company and use other income as the source account for the deposit


If the member is paying the deductible or some part of it, then it depends

 

IF, if the member paid the repair company directly =
make a deposit to a cash type bank account and use the member equity investment account as the source account for the deposit. Then use the cash account and pay a portion of the repair bill.
or
IF, if the member paid the company, make a deposit in the bank and use the member equity investment account as the source account for the deposit


Pay the bill

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