I have read that when logging payment for insurance you have to log it in a particular way.
If the premium is due in June and that the accounting period is at the end of the year, then only 50% of the insurance premium is logged. That’s the easy part to understand.
What happens to the remaining 50% of the premium? How is it logged?
I don’t have an accountant to explain these things.
I’d be grateful for any advice on this matter.
You can follow this link but edit it to account for the months remaining in your case
What I do for things like this is log the purchase in full when it is invoiced, but work out how much of the total needs to be apportioned to the next year and create a journal crediting that amount off the purchase code and debiting a “prepayments” nominal under assets and liabilities. I set the journal date to the date of the original purchase and the “auto reverse date” to the first day of the following accounting year.
The effect of this is to put the right proportions into P&L for the two years, and put the deferred part as an asset on the year end balance sheet.
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