Example of a Prepayment situation and approach

A bill has been received to cover a service being provided for the next six months such as regular waste collections.

Record the initial bill to the Prepayments and Accrued Income Account as an asset (amount due) until each monthly service has been supplied and then recognise the expense for that month.

  1. Enter the Bill for the gross amount selecting the Prepayments and Accrued Income Account found as a Current Assets - Debtor
  2. Navigate to the the Bill and from the Action Menu select Add Prepayment Schedule
  3. On the Prepayment Schedule screen, select the Charged to Account to record the monthly expense and click on Generate Payments
  4. Select the bank account the payment is being recorded to.
  5. Enter the start date, the Count, in this example 12 and the interval for posting the Journal again in this example monthly
  6. Click SUBMIT to create the schedule, the screen then displays the details. Any journals dated in history (prior to today's date) are posted and shown greyed out
  7. The system will record the journals and payment transactions for the No. Remaining
  8. At the end of the period an amount has been recorded as an expenses in each month so that a balance on the Prepayments and Accrued Income Account is zero

Note if a payment document is used (rather than a bill) the option to Generate Payments is not available.