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NNG Enterprises
Level 1

Record insurance premium

I am using QuickBooks online for the company I work for. We signed up for Auto insurance in June 2020 with a down payment of $6500.20. the total policy premium quoted to us was $32227. we were given an option to pay in 10 equal instalments of $2558.96. the company suddenly increased the premium and now the total premium went up to $39000. this resulted in increase in installment to $3611.09 and one extra payment of $5772. The company is thinking now to cancel this policy and start a new policy with a different insurance company. I am little confused how to handle this change in policies. Also how to record the premium payments. do I need to create an accounts payable for the total premium and then apply the installment payments, but then we are cancelling the policy??? so how do we record it

Please help

Solved
Best answer November 12, 2020

Best Answers
MaryLurleenM
Moderator

Record insurance premium

Thank you for the detailed post, NNG Enterprises.

 

Allow me to help you record these transactions in QuickBooks. First off, you can create a liability account with a balance of $32,227.

  1. Click Accounting on the left pane.
  2. Select Chart of Accounts.
  3. Select New.
  4. From the Account Type drop-down menu, select Other Current Liabilities.
  5. From the Detail Type drop-down menu, Trust Accounts - Liabilities.
  6. Enter a name for the account (Health Insurance Premium) or accept the suggested name.
  7. Enter the balance amount.
  8. Select Save and close.

Then, record the payments by creating expense transactions using the account you just created. You can record the increased premium amount via journal entry. You can check this with your accountant to make sure it's recorded correctly.

 

Furthermore, canceling the insurance means you have to reverse the JE to zero out the balance of the liability accounts. You'll need your accountant for this.

 

You can check this article to learn more: Record a retainer or deposit.

 

If you have other questions about recording your health insurance premiums, don't hesitate to leave a reply.

View solution in original post

2 Comments
MaryLurleenM
Moderator

Record insurance premium

Thank you for the detailed post, NNG Enterprises.

 

Allow me to help you record these transactions in QuickBooks. First off, you can create a liability account with a balance of $32,227.

  1. Click Accounting on the left pane.
  2. Select Chart of Accounts.
  3. Select New.
  4. From the Account Type drop-down menu, select Other Current Liabilities.
  5. From the Detail Type drop-down menu, Trust Accounts - Liabilities.
  6. Enter a name for the account (Health Insurance Premium) or accept the suggested name.
  7. Enter the balance amount.
  8. Select Save and close.

Then, record the payments by creating expense transactions using the account you just created. You can record the increased premium amount via journal entry. You can check this with your accountant to make sure it's recorded correctly.

 

Furthermore, canceling the insurance means you have to reverse the JE to zero out the balance of the liability accounts. You'll need your accountant for this.

 

You can check this article to learn more: Record a retainer or deposit.

 

If you have other questions about recording your health insurance premiums, don't hesitate to leave a reply.

View solution in original post

NNG Enterprises
Level 1

Record insurance premium

Thank you for your response

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