In the Excel,or spreadsheet,approach to recording financial transactions,expired insurance coverage on factory equipment is recorded as a decrease in the Prepaid Insurance column and as a decrease in the Retained Earnings column.

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Expired insurance coverage on factory equipment reduces the value of the asset, which in this case is factory equipment. Therefore, it should be recorded as a decrease in the factory equipment column (or similar fixed asset column) and as an increase in the insurance expense column, not in the prepaid insurance column. Additionally, since this is a decrease in assets, it would also decrease total equity, not just retained earnings.

In the Excel,or Spreadsheet,approach to Recording Financial Transactions,expired Insurance Coverage