264 Insurance Commissions Receivable

Assets

Receivables

Synopsis

Account 264 is established to record the amount of Insurance Commissions owed to the dealership from various Insurance Companies for policies sold to customers.

Debits

Credits

  1. The Insurance commissions due from insurance companies

  1. The payments received from insurance companies

  2. The monthly adjustments necessary to reconcile this account

 

Example 1

Record $495 insurance commissions earned for the month of which $250 is earned for new and $245 is earned for used.  These commissions had not been previously accrued.

Journal: Standard Entries Journal 

Entry:

 

Debit

Credit

Account 264

Insurance Commissions Receivable

$495

 

Account 807

Insurance Commissions Earned – New

 

$250

Account 809

Insurance Commissions Earned – Used

 

$245

Example 2

Record the $495 payment from the insurance company for the above commissions earned.

Journal: Cash Receipts

Entry:

 

Debit

Credit

Account 201

Cash on Hand

$450

 

Account 807

Insurance Commissions Earned – New

$25

 

Account 809

Insurance Commissions Earned – Used

$20

 

Account 264

Insurance Commissions Receivable

 

$495

Comments

A debit balance represents unpaid insurance commissions due from insurance companies.

Note:

The month-end balance should be reconciled with the periodic insurance company statements.  Any difference should be determined and corrected.