cost accounting help?

Question

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

Answer 1

You do have to credit the prepaid insurance for $7,000. You would then debit "Insurance expense", however, since you are allocating the insurance expense directly to the video production and to marketing and administrative activities then you would debit work in progress (videos in progress) $5,600 (7,000*80%) and also debit marketing and administrative activities expense $1,400 (7,000*20%).
Without seeing the whole thing, this is the simplest answer.

There is no need to do anything with the cash account since this is NOT a cash transaction. There is no need to touch any liability account since you are expensing an asset.

Answer 2

Are you accounting for the insurance as an expense? Then debit it, and credit cash (asset) or accounts payable (liability).