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Post Info TOPIC: Prepayments
Nicola27


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Prepayments
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Hi i understand how to do prepayments, but what is the correct way to do it when you have an invoice.

I was thinking post the invoice to Prepayment 1103 and then journal x amount over to rent every month.

Or do i need to post it to rent, and then move that to 1103 and then move it back every month?

Thanks

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AngelaWBS


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Hi Nicola,

I would post the invoice to rent (or whatever the invoice relates to) and journal out to prepayments.

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Angela
http://www.bookkeeping-suffolk.co.uk/
Nicola27


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Ok brill, i had already posted the invoice to Rent. Just needed to reassure myself. Thanks

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Nicola27


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another question! Sorry,

Do i have to manually post the vat across every month too?

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BannanaMan


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Hi Nicola

No - when you journal between prepayments and rent it is the net amount you need to transfer. The VAT stays in the VAT account.



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Bannana Man

A.K.A. Ben the mild-mannered Book Keeper
Nicola27


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awesome thanks, i swear sometimes i just try to make life harder for myself!

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Alan3


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hi angela,
if i get a rent invoice for jan to dec /lets say/  £1200
what are the journal entries?

i know when i receive the rent invoice i would Cr the purchase ledger account, then would i Dr prepayments (jan £1200) and dr expenses £100

Feb Dr prepayments Feb£1100 and dr expenses £200
??

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MarkS


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Alan

The way i would post is as follows.

In Jan you receive the invoice for Jan to Dec for £1200 (or £100 per month).

Dr Rent £1200
Cr Creditors (P/L) £1200

Dr Prepayments £1100
Cr  Rent £1100

So in January you have £1200 in creditors, £100 in rent (£1200-£1100), £1100 in prepayments (feb - dec)

Then in the other months release £100 each month over Feb to Dec ie

Dr Rent £100
Cr Prepayments £100

£100 will be charged each month to your rent expense and the prepayments will reduce £100 each month until Dec.

MarkS

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Mark Stewart CA

http://stewartaccounting.co.uk/

Providing accounting, bookkeeping, payroll and tax services to small and medium sized businesses across Central Scotland and beyond.
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