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Prepaid Expenses
When the company has any prepaid expenses, you should do the following to post the expense to the period(s) the prepaid amount covers. When the prepaid amount is paid, debit it to a prepaid asset account. Then split the amount into monthly portions. For example, if the prepaid expense covers a three-month period, split it into thirds. Either set up a standard monthly journal entry for the monthly amount or enter a journal entry each month for that amount, moving the expense from the prepaid asset account into the proper expense account.