It's me again struggling to understand where to post incoices and doing prepayments.
I have receveid an O2 telephone bill 10 days before the year end dated 20 of jan. Our year end is end of Jan. The bill includes a line rental up to the middle of the following month Feb 11 (New financial year).
First question
Do I have to prepay this bill because half of the bill include line rental for february?
If Yes, do I post the O2 invoice to the O2 account with nominal code 7202 (telephone bill) or 1103 (prepament)?
I used to post invoices such rate to the rates company with n/c 1103 (prepayment) and then do journals for the 12 months (dr rates acc and CR Prepayment acc), but now you said to post invoice to the rates company with nominal code for rates and Dr prepayment and Cr rates account.
Are these ways both correct or its me getting wrong .
Stuart is right. You need to post the invoice as you normally post your supplier invoices. Cr the supplier account and Dr telephone account. The amount is the total on your invoice. Than you Dr prepayment acc and Cr telephone account with the amount prepaid.
I don' t understand why I am getting different answers, was my accountant telling me the wrong way to do prepayments and what about the post I send couple weeks ago about Alarm maintenance preapayment in sage. I have asked if it was correct to post invoice alarm to the company account with nominal cade 1103 (prepayment) and after do the monthly journals (Cr Prepayment and DR alarm maintenance acc) and they said it was correct .But you are saying that I should have posted the invoice to alarm company with n/code 7805 (alarm Maintenance) and not 1103 (prepayment).
It is very confusing and I will like a correct answer.
Sorry, I see I was helping you with the previous post you mentioned and didn't respond to your last post... must have missed it.
The guys above are correct, you should post the amount of the entire invoice to your telephone nominal account and then journal out the amount of the prepaid part to prepayments 1103.
So your invoice will be Dr Telephone nominal Cr Creditor account (O2) and then your prepayment will be Cr Telephone nominal and Dr Prepaments.
Hope this helps! It can sometimes take a while to get your head round accruals and prepayments.
