Journal Entry for Life Insurance Premium & Employee’s Life Insurance Premium
Last Updated :
05 Apr, 2023
1. Life Insurance Premium:
Sometimes, Life Insurance Premium is paid by the business on the behalf of the proprietor. Life Insurance Premium of the proprietor is considered to be a personal expense of the proprietor and hence is treated as Drawings by the business.
Journal Entry:
Example: Life Insurance Premium is paid ₹5,000.
Solution:
2. Employee’s Life Insurance Premium:
Businesses purchase life insurance for their employees too. Unlike the Life Insurance Premium of the proprietor, any payment made on purchasing Employee’s Life Insurance is not considered a personal expense rather it is treated as a business expense.
Journal Entry:
Example: Employee’s Life Insurance Premium is paid ₹10,000.
Solution:
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