Hi Nikole
OK - sorry, Ive no clue why I had income in mind! Losing the plot somewhat!
Right so - think of it this way - the invoice is in this year, BUT the amount being charged is MOSTLY for in your new financial year, ie you are being billed for a service that you have not yet had and the matching principle means that you should only have the portion in your accounts that represents this financial year.
Forget the payment - its the invoice we need to concentrate on.
The supplier has charged you for 21 - 31 March (in year) and
1 April - 22 June (out of year ie in next financial year)
Now if the invoice had been dated 31 March you could just charge it all straight to the prepayments code, but in this case it needs to be split. So key the invoice as usual - ie the whole lot to your rental expenses code.
That expense account is overstated so you need to maneouvre some of it out of there. How much is the invoice (EXCLUDING VAT, which there may not be anyway!)
Invoice covers 94 days in total. Only 11 days are in this year, so the rest ie 83 days worth are considered prepaid. So journal £xx.xx /94 x 83 from expense ie credit rental expense and debit prepayments.
What software are you using?
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I am using Sage. Part of my thinking was on par with you. I was going to post a journal for the portion that relates to the new financial year into the prepayments the I started to think about doing a reversal when the time comes. My brain is not cut out for this tonight.
Something that might help, add say a 1 to your prepayments code and use it for this expense, then set one up with a 2 at the end for say prepaid insurance etc. Easier to manage I reckon. Then yes do a reveal entry on 1st day of new period.
If you are doing monthly management accounts you would do the journal adjustments every month, but not all clients want information to that kind of level.
Hth
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Thank you for the tip on numbering. I will do that tomorrow to make life easier.
Daft thing about my scenario tonight is i posted several journals for pre payments last year and forgot :/ this year. And I need to stop over analysing!
I had a company ask me about management accounts a few months ago but i politely declined. Seems way too complicated.
It's one of those things-do it once a year and you can forget. For the regular ones it's sometimes easier to start with to set up a spreadsheet so you can see what transactions you need to do and tick them off as you go/balance check as you do them.
Any wanting management accounts, sling my way!!
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Ha, Nikole, I dont care where my clients are based. Well - mostly I dont as a lot can be done remotely with the right ones. It doesnt work for all clients nor businesses, but I keep an open mind - will say no if I have no capacity/staff to help or frankly if I dont take to the individual or from an ethical point of view.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
