Cost accounting help?

Here is a listed transaction.
Prepaid insurance expired during the year, $7000 (80% related to production of videos, and 20% related to marketing and admnisitrative activities).
Its a Video production business, and im recording transactions into T-Accounts. Im not sure how to deal with expired insurance....im pretty sure i have to credit prepaid insurance $7000, but what do i debit? is the company getting money for something? where is it goiiiiiiing. I have an t account for "videos in progress"...which is like work in progress...i duno if i need to use that...but please help meeee...it also says im allowed to make new t accounts as needed

When you credit a prepaid asset, it usually means you debit the expense - insurance expense used.

Contact your insurance agent immediately with this problem. Answering your questions professionally is one of the things he does to earn his commissions.

The debit would go to Insurance Expense.

An example would be:

Prepaid Insurance (12 months) !200.00 Db
Cash 1200.00 Cr

During the next year, each month the entry would be:

Prepaid Insurance 100.00 Cr
Insurance Expense 100.00 Db


I hope that this helps.

If you had prepaid insurance, you were supposed to allocate it as you go during the year. It is expense in general, no matter which accounting method you are using (cash or accrual method).

Your Prepaid Asset became an Expense as time passed. Each month part of your asset value becasme an indirect expense for your video production and your admin activities. If you debited the Asset account from the beginning, as time goes by, you would debit the expense account each month and credit your Prepaid Asset account. The cost of the insurance would be spread across the videos (80%) and the other 20% would be an admin expense.

80% of the 7k (the piece that related to production) would be a charge to production related insurance expense.

20% of the 7k would be charged to G&A insurance expense.