EX. 9-7

The insurance expense recognized by an enterprise fund depends on the type of carrier.

The water and wastewater utility (enterprise) funds of three cities each paid $1 million in casualty insurance premiums. City A is insured by a small independent insurance company. City B is selfinsured and accounts for its insurance activities in an internal service fund. City C is selfinsured and accounts for its insurance activities in its general fund. Each of the insurers collected a total of $10 million in premiums from all the parties that it insures, including the city utility funds. Of this amount, each paid out $8 million in actual claims. The balance was held in reserve for major catastrophes.

Prepare the journal entry that each of the three utility funds should make to record its insurance payment and expense for the year. Comment on any differences.