Prepayments

sarahwilson

Can someone nod or shake their head to this, I think I've got the double entry for a prepayment sorted.

Pay 12k for premises insurance for the year.

Credit bank with 12k for the payment
Debit premises insurance acct (p&L) with 12k

Credit premises insurance acct (p&l) with 12k
debit prepayments (balance sheet) with 12 k

then credit prepayments monthly with 1k
and debit premises insurance with 1k

Anywhere near?

Nich

That looks fine, but instead of doing points 1 and 2, y dont you just:

Cr Bank
Dr Prepayments

then monthly

Dr Premises
Cr Prepayments

It just saves doing more entries than you need to

sarahwilson

Yes I suppose it would make more sense to do what you have said, I was just trying to tick off in my head all the bases!! Thanks

sarahwilson

If I did it the longwinded way would I get marked down does anyone know?

columbia

Do it however you want, so long as you give the correct answer!