Accounting for Insurance: Apex and BATA Ltd.

How do Apex and BATA Ltd. account for insurance in their financial statements?

a) What are the journal entries for insurance payments and receipts at Apex and BATA Ltd.?

Journal Entries for Insurance Payments and Receipts

a) The journal entry for the payment of insurance in the accounts of Apex would be as follows:

Insurance Expense Debit: $48,000
Cash Credit: $48,000

This entry reflects the decrease in cash (an asset) and the increase in insurance expense (an expense account) due to the payment of insurance.

For Apex, the company uses the expense method to account for insurance. When making the insurance payment, the journal entry records an increase in insurance expense and a decrease in cash.