life insurance premium of the proprietor will be considered as drawings or an expense..??
Dear Student,
Life Insurance Premium paid will be considered as 'drawings' of the business by the proprietor as it is paid for the sole benefit of the proprietor. It does not belong to the business entity.
The Journal entry for insurance premium paid will be:
Life Insurance Premium paid will be considered as 'drawings' of the business by the proprietor as it is paid for the sole benefit of the proprietor. It does not belong to the business entity.
The Journal entry for insurance premium paid will be:
Drawings A/c Dr. 5000
To Cash A/c 5000
(Being Life Insurance Premium paid)
Hope this answers your query.
Due to paucity of time we are not able to answer your remaining questions.