Yell insurance of £144 from Jan 13 to Dec 13 (x 12 months)
Its paid in 10 Installments starting in Jan @ £14.40 (Jan to Oct)
so equiv monthly payment of £12 x 12months
at the Y/E 3 payments should have been made totaling £36 leaving a remainder of £108 for next years accounts
What had been paid is £42.20 so a prepayment of £7.20 had also been made
The creditors Control account shows £100.80
This is my question. I would leave the creditors control account with 100.80 as this is corect and shows what is due to be paid to yell?
I need to adjust my P/L Advertising account from £144 down to £36 by Cr this account how do I show this and what accounts please. (Prepayment and accrual?)
No because £144 is included in the profit and loss.. And prepayments seek to adjust the profit and loss to the correct charge, which is £36. The £42.20 is just what's been paid against the invoice.. credit bank, debit creditor - a balance sheet movement that has no bearing on the profit and loss
Makes sense so all i need to do to adj then is leave control cr acc at 100.80 as it is. Cr advertising exp in p/l 108 to bring this to 36 which is the correct charge for the year and dr prepayments 108. How does the prepayment get cleared next year as I use sage and the payment goes to control account.
You would do a monthly journal crediting prepayments and debiting advertising of £12 per month and your bank payments will continue to clear the creditor
Sorry it's short and sweet replies.. Using my mobile :$
You are best off setting up a prepayments code especially for it.. Makes it easier to keep track of. Use the same code as prepayments but add a 1 at the end so it becomes a 5 digit code. It's like a sub code then
No thank you ... you have been a great help. Well its 1.12 am and thanks to you I am going to bed. X will post this and set up reocc jnls so dont have to worry about it. Am I also right in thinking on sage a prepayment goes in two accounts one on bs and one on pl? Or is this just depreciation
Don't forget to cancel the reocc journal before the last month gets posted. Doing the last posting manually means you can clear the prepayments account down to nil.. Hence why I keep my prepayment code separate.. There's usually pences in rounding Night :)
