USA Double entry for expenses with multiple reimbursements.

[KCVet]

I am trying to learn double entry accounting for school. And I figure the best way is to work it on my personal budget. Could someone tell me if I did this entry correctly? I think I did it right. But I also could have screwed it up royally. Here's the situation. This would be very helpful, thank you.

I paid $200 for a medical expense for my child. Insurance will pay us back $150. Me and my ex-wife split the medical costs for our kids. So I expect to get half of the remaining $50 from her, which would be $25.

	Budget Category	Debit	Credit
Doctor's appointment	Medical	200
	Cash		200
Expected from Insurance company	Cash	150
	Insurance Reimbursement		150
Applied insurance reimbursement to medical budget	Insurance Reimbursement	150
	Medical		150
applied reimbursement from ex to medical budget	Reimbursement from Ex	25
	Medical		25

 

[DrStrangeLove]

OK, a couple things come to mind. First, your medical expense should be $200 at the end of it. Because that's how much was spent on medical services. None of the transactions you describe are going to change that. Second, you're not reflecting the cash that changes hands here. Third, budgetary entries aren't done in the same books as actual transactions. (One accounting prof of mine describes it as: These transactions are in Actual World, not in Budget World.)

Doctor's appointment: Medical Expense 200 DR, Cash 200 CR. This one's right. You paid $200 for medical services.

Expected from insurance company: Insurance Reimbursement 150 DR, Insurance Revenue 150 CR. You expect $150 from the insurance company, and it will be new cash to you, so it's revenue. But you haven't gotten it yet, so you can't book cash; you have to book a receivable until the cash comes in. When it comes in, you book Cash 150 DR, Insurance Reimbursement 150 CR.

Applied insurance reimbursement to medical budget: no entry. You don't reduce your medical expenses; you still spent $200 on medical expenses, regardless of how much you've budgeted for it. Budgets are done in a different set of books.

Applied reimbursement from ex to medical budget: Receivable from Ex 25 DR, Revenue from Ex 25 CR. The argument here is the same as with the insurance company reimbursement. When the ex pays up, you book Cash 25 DR, Receivable from Ex 25 CR.

So at the end of it, when everyone has settled up, you have: Medical Expenses 200 DR, Insurance Revenue 150 CR, Revenue from Ex 25 CR, and Cash 25 CR. You paid out 200, you got 150 from the insurance company, 25 from the ex, and the rest came from you.

 

[KCVet]

Thank you so much. You are absolutely correct. I was still viewing everything as budget categories and not as accounts. You are already leaps and bounds more helpful than my professor. Thank you again.