Was this page helpful?
Thank you!

Comments or suggestions?



Enter Email Address (optional)
email

Record and Allocate Prepaid Expenses

Your customer wants to spread the expense of an item paid in a single amount (i.e. insurance premiums, Yellow Page bill, etc.) over a period of several months in order allocate expenses to the appropriate month.

Solution Description
Detailed Instructions:
 
  1.  Create an account to track the prepaid expense, generally an ‘other current asset’ account.
    1. Click on Chart of Accounts, then Account, then New, (or Ctrl-N).
    2. Under Other Account Type, select Other Current Asset, then Continue
    3. Assign an account number (if used) and name (i.e. Prepaid Expenses).
  2.  Enter payment to vendor using the newly created Prepaid Expenses account on the Expense tab.
  3. Create a memorized journal entry to allocate one month or quarter of the expense.
    1. Click on Company, then Make General Journal Entries.
    2. Enter appropriate date for the first period the expense actually belongs to. You can either enter your own entry number, or allow QuickBooks to auto-assign one.
    3. Debit the expense account and credit Prepaid Expenses for the appropriate percentage of the total payment (1/6 if 6 months, ¼ if quarterly for a year).  You can include an appropriate memo if you choose.
    4. Enter Ctrl-M to memorize the transaction.  Assign it a name (Umbrella Insurance), and choose Automatically Enter.  Select how often you want the entry recorded and the date of the next transaction.  Also indicate the number of remaining entries.
    5. Click OK.
  4.  The entries will record according to the frequency you selected, reducing the Prepaid Expenses account each period.  The balance in the Prepaid Expenses account should be zero at the end of the coverage period.
  5. If the user has multiple prepaids to track, it is suggested that they create sub-accounts of the Prepaid Expenses account in order to track each separately.

If this solution does not resolve the issue, you can read discussions and post messages and questions relating to your issue on the Intuit QuickBooks Community site. You can also review other available QuickBooks support options for additional guidance.

                     

Your opinion counts!  Please use the voting and feedback buttons to help us build a better Knowledge Base.

KB ID# HOW13250
9/22/2014 3:14:04 AM
PPRDQSSWS401 9102 Pro 2013 a60108