QuickBooks | Prepayment

Software: QuickBooks accounting software

Assuming your financial year (fiscal year)  is from Jan to Dec and you paid an insurance premium of $1,200.00 in the month of Aug 2013 for 6 month period from Aug 2013 to Jan 2014.

You can use a write cheque function in QuickBooks to record this payment transaction. In the Expenses tab of the Write Cheque transaction you may record the Insurance expenses on the first line (for the current month) and the remaining amount associate to the Prepayment account on the second line (for Sep 2013 to Jan 2014).

Prepayment

The double entry for this transaction will be:

Debit Insurance account (Expense account type): 200.00

Debit Prepayment account (Other Current Asset account type): 1,000.00

Credit Bank: 1,200.00

Next, you need to do a monthly journal (you may consider using  a memorized transaction) from Sep 2013 onward to reverse the prepayment down to the Insurance expenses. The double entry for the monthly journal should be:

Debit Insurance (Expense account): 200.00

Credit Prepayment (Other Current Asset): 200.00

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