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Post Info TOPIC: Insurance Finance and Prepayment postings - help!
Babba


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Insurance Finance and Prepayment postings - help!
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I'm going round in circles with this at the moment so hope somebody can help.

 

I have 2 debit notes for 12 month insurance policies that will be paid over 6 months under a finance agreement.

 

I know I really need to spread this over the 12 months not just the 6 and I need to account for the interest element of the monthly payments too.

 

How do I post the entries for this in Sage Instant?

 

Thanks



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Shamus


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Hi Alison,

welcome to the forum.

The payments are loan financing rather than insurance.

The insurance is taken in it's entirety as though paid for and spread over the period as current insurance and prepayments

The financing of the purchase is recognised as a liability and as payments are made this liability is reduced.

The double entries would be

Dr Insurance (current year apportionment)
Dr Prepayment (Following periods apportionment)
Cr Liability

As payments are made

Dr Liability
Cr Bank

At the period end reverse the Prepayment

Cr Prepayment
Dr Insurance

I'll leave it to others to fill in the nominal codes.

kind regards,

Shaun.

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Shaun

Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
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