Prepayment Question

Pinkjo

Hi guys, I have a question regarding prepayments. I'm hoping my thoughts are right, and you lovely lot are going to agree with me :001_smile: Hee goes....

I have a spreadsheet set up for my prepayments, currently aboout 40 entries and I do a journal monthly. These are split between 3 divisions, so for example I pay the £600 advertising bill in June, this covers Jul/Aug/Sep for all 3 divisions. When I pay the bill I post it to prepayments, then monthly I would do a journal

DR Advertising £66.66 Division 1
DR Advertising £66.67 Division 2
DR Advertising £66.67 Division 3
CR Prepayments £200.00

Now, 2 of our divisions closed down in August (say Division 2 and 3), would I post the whole £200 to Division 1 for September?

Thanks for your input.

Monsoon

Pinkjo wrote: »

Now, 2 of our divisions closed down in August (say Division 2 and 3), would I post the whole £200 to Division 1 for September?

Sounds about right to me.
The point of prepayments and accruals is to give a true and fair view and put the income/expenditure in the right place at the right time and your treatment sounds fair to me

Pinkjo

Thanks faerie9 :thumbup1: