The journal entry to record the estimated advance premium payment for workers' compensation is

Question

Quizplus · Accepted Answer

The journal entry to record the estimated advance premium payment for workers' compensation is to debit Prepaid Insurance, Workers' Compensation and credit Cash since the payment is made in advance of coverage being provided. Therefore, option B is the correct answer. Option A is incorrect because Cash should be credited, not debited. Option C is incorrect because it implies that the expense has already been incurred and debited to the account, which is not the case. Option D is incorrect because there is no liability being created in this case, as the payment is being made in advance.

The Journal Entry to Record the Estimated Advance Premium Payment