088 Insurance

088 Insurance - Other

Expenses

Fixed

Synopsis

Account 088, Insurance – Other is established to record the monthly provision to pay the policy premium for insurance coverage. Not included are premiums for real estate, which is posted to Account 085, Insurance – Buildings & Improvements; lease and rental units, which are covered under automobile liability policies; and worker’s compensation, which is recorded in Account 027, Employee Benefits.

Debits

Credits

Monthly provision for Insurance other than on real estate, improvements, lease and rental units and worker’s compensation

Example 1

Record the monthly expense for the commercial property in the amount of $1,250 and the garage keeper’s insurance in the amount of $7,000 that had been paid in advance. Both the $1,250 and the $7,000 are distributed to each department as shown in the example below.

Journal: Standard Entries Journal

Entry:		Debit	Credit
Account 085-01	Insurance – Buildings & Improvements – New Vehicle Department	$225
Account 085-02	Insurance – Buildings & Improvements – Used Vehicle Department	$188
Account 085-03	Insurance – Buildings & Improvements – Lease & Rental Department	$88
Account 085-05	Insurance – Buildings & Improvements – Mechanical Department	$225
Account 085-06	Insurance – Buildings & Improvements – Body Shop Department	$187
Account 085-07	Insurance – Buildings & Improvements – Parts & Accessories Department	$175
Account 085-09	Insurance – Buildings & Improvements – General & Administrative	$162
Account 088-01	Insurance – Other – New Vehicle Department	$1,470
Account 088-02	Insurance – Other – Used Vehicle Department	$1,050
Account 088-03	Insurance – Other – Lease & Rental Department	$140
Account 088-05	Insurance – Other – Mechanical Department	$1,330
Account 088-06	Insurance – Other – Body Shop Department	$700
Account 088-07	Insurance – Other – Parts & Accessories Department	$1,260
Account 088-09	Insurance – Other – General & Administrative	$1,050
Account 271	Prepaid Insurance		$8,250

Distribution of Expenses

	Departmental Distribution
088 Insurance - Other	New Veh.	Used Veh.	Lease & Rental	Mechanical	Body Shop	Parts & Access.	Gen & Admin.
	01	02	03	05	06	07	09
Accounts receivable							Total expense
Fidelity bond	Employees	Employees	Employees	Employees	Employees	Employees	Employees
Collision coverage for company-owned vehicles other than lease and rental units	Vehicles assigned	Vehicles assigned	Vehicles assigned	Vehicles assigned	Vehicles assigned	Vehicles assigned	Vehicles assigned
General contents	Department’s Percentage of Insured Contents	Department’s Percentage of Insured Contents	Department’s Percentage of Insured Contents	Department’s Percentage of Insured Contents	Department’s Percentage of Insured Contents	Department’s Percentage of Insured Contents	Department’s Percentage of Insured Contents
Valuable papers and records							Total expense
Plate glass and lettering in showroom (if separate from building insurance)	Total expense
Money and securities							Total expense
Business interruption and liability coverage	Department’s percentage of year-to-date gross profit	Department’s percentage of year-to-date gross profit	Department’s percentage of year-to-date gross profit	Department’s percentage of year-to-date gross profit	Department’s percentage of year-to-date gross profit	Department’s percentage of year-to-date gross profit
Umbrella coverage	Employees	Employees	Employees	Employees	Employees	Employees	Employees
Comprehensive garage liability	Employees	Employees	Employees	Employees	Employees	Employees	Employees

Comments

Premiums for policies such as the general garage keepers policy, business interruption insurance, umbrella coverage, general contents & fire insurance, automobile coverage for company owned vehicles and other various policies are properly recorded in this account. In most cases, the premiums are paid in advance for annual, semi-annual, or quarterly terms. When this is the case, the premiums are recorded in Account 271, Prepaid Insurance and the monthly provision is posted to Account 088, Insurance Other.

Departmental Distribution