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Prepaid exp

Saudagar K (accounts) (64 Points)

10 March 2015

Dear All,

Pleas help for this,

Storage license fees paid To BMC Rs.8000/- for period 01-01-2015-31-12-2015,

whichh entry pass?? hos it is effected in our P & L and B/S.

Thanks

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5 Replies

sesha (accounts executive) (1101 Points)
Replied 10 March 2015

itshould accounted as 1-1-2015 to 31-3-2015 account rs2000 and then fiancial yr 1-4-2015 to 31-12-2015 10000

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Saudagar K (accounts) (64 Points)
Replied 11 March 2015

will u clerify the entry ???

Poornima G (Articled Assistant) (22 Points)
Replied 15 March 2015

Storage Liscense Fees (under Indirect Expenses) Dr. Rs. 2000

Cr Bank/Cash Rs. 2000

Prepaid Expenses (under Current Assets) Dr. 6000

Cr. Bank/Cash Rs. 6000

Impact on account of above transaction, Bank decreases by Rs. 8000, Prepaid expenses in asset side Rs. 6000 as on 31/3/2015. and Rs. 2000 charged to expenses.

Please note in the subsequent year, that is on 1.4.2015, pass the entry

Storage Liscense Fees Dr. Rs. 6000

Cr Prepaid expenses Rs. 6000

This entry is to recognise the portion of expense for FY 2015-16.

Anil Kumar (Accountant) (21 Points)
Replied 16 March 2015

Enty Shuld not book directly for Payment. First it should book for Payable then payment.

Poornima G (Articled Assistant) (22 Points)
Replied 16 March 2015

The query asked by the concerned person states that the amount is paid to BMC , hence I put forth the above entries. The amount is already paid in advance for the subsequent financial year also.