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Clarification for prepaid expeses - journal enteis

M.SATHISHKUMAR (Audit) (68 Points)

03 July 2017

Hi Friends,

I have doubt reagarding "Prepaid Expenses"

Question

1) Preapaid Insurance of Monthly is Rs 30,000 and please pass the entries for the 12 months. Please clarify my doubt.

Advance Thanks

Sathish

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5 Replies

Karan Batra (Creator: TheProTalks) (2325 Points)
Replied 03 July 2017

Whenever you pay any expense as prepaid it means you are paying it in advance and it will gather you future cash inflows thus till the time actually comes to treat it as an expense, it is categorised to ve an asset.

1	Prepaid expense A/C Dr.	Amount Paid
	To Bank
2	Expense A/C Dr.	Amount Written off as expense on time basis/or usage basis
	To Prepaid expense A/C
3	SPL A/C Dr.	Amount Written off charged in SPL
	To Expense A/C

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Rama chary Rachakonda (Master in Accounts & high court Advocate email ID:ramachary64@gmail.com voice no:9989324294) (7327 Points)
Replied 22 July 2017

The period of the month recording also is important. Debit prepaid expenses at the end of the each month. When the expenses paid is required the exact of date of payment in the voucher/bill etc.