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Insurance Premium Loan

 
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Juliem



Joined: 25 Aug 2009
Posts: 1
Location: Brisbane

PostPosted: Tue Aug 25, 2009 1:57 pm    Post subject: Insurance Premium Loan Reply with quote

Hi

As a small start up consulting company, we have taken out various insurances to cover us for professional indemnity, management liability etc. These cover us for 12 months.

However, instead of paying the full amount of the premiums up front, we have taken out a loan for the insurance premium funding. This includes a finance charge and the total amount is repayable in 12 equal monthly instalments. The loan documentation was provided by the insurance broker who organised the insurances required.

I would appreciate any suggestions on how I can account for the insurances, loan and monthly repayments. I am using MYOB Accounting.

Thanks in advance.

Julie
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Bob



Joined: 24 Jun 2008
Posts: 180
Location: Indonesia

PostPosted: Sat Aug 29, 2009 2:15 pm    Post subject: Reply with quote

Julie,

There are 3 entries here
Set up the liability accounts first
Eg Dr Prepaid Insurance 12 months cost
Cr Supplier

When payment occurs,
Dr Supplier
Cr Bank/Cash

To record the expense
Dr Insurance exp 1 mth cost
Cr Prepaid Insce

The same procedure occurs with the finance charge,
I would use recurring Entries to record the last entry

Best of Luck………Bob
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