how to post transaction in sage?

khurshah

how to post prepaid insurance in nominal ledgers? prepayments can be regarded as assets and insurance is liability so if prepayments is credited then liability will be debited but how to figure out this post with bank account in books? any suggestion for me please?

Valetta

The way I would do it:

Post the invoice: Dr Insurance A/c 12,000
CR Creditors Control A/C 12,000

Prepay the full invoice:
Dr Prepayments 12,000
Cr Insurance A/C 12,000

Then each month bring 1/12 of the total to P & L Account
Dr Insurance 1,000
Cr Prepayments 1,000

I am assuming the invoice is in January for the calender year. At the end of the year the full 12,000 will be charged to the P & L account and there will be no prepayment left on the balance sheet.

thomlin

Hi Op,

Set up the insurance company as a supplier don't have to give it the insurance companies name as you might change insurance companies each year.

When setting up the supplier make sure to change the default nominal from purchases to the insurance nominal ( I can't remember the nominal codes).

Assuming your insurance is from January to December but change accordingly

Post half to the default nominal (Jan - June) then duplicate the line but change the nominal to prepayments for the other half (Jul - Dec)

Then at month end from July to December post a journal to reduce prepayments and increase the insurance nominal by 1/12th

You don't need to use the creditor ledger as you will have paid for the insurance directly so just post a bank payment against the full amount for the insurance supplier.

HTH

Tom

khurshah

So I would need to journal entry as

Debit Prepayments, Credit Bank

Debit Insurance, Credit Prepayments ?

Valetta

khurshah wrote: »

So I would need to journal entry as

Debit Prepayments, Credit Bank

Debit Insurance, Credit Prepayments ?

If you are not putting it through the creditors ledger then this is the way to go.