Example of a Prepayment situation from an Advanced VAT Invoice (VAT Schedule) from a Supplier

A bill has been received covering 12 months of a continuous service agreement for the provision 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 and ensuring the VAT rate is Out of Scope
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 and the appropriate VAT rate for the service
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. VAT is recorded as input tax on the date of each posting
9. 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