We made a pro forma invoice pre payment by company card on 28.10.20 then received the tax invoice on 04.11.20, however our financial year end is 31.10.20 and this is the only prepayment showing on the creditors listing at 31.10.20. How do i account for the prepayment of £74.88 in the final accounts at 31.10.20. Do I debit prepayments 1103 but which nominal do I credit - is it general purchases 5000 where the invoice was coded to subsquently. then at start of end is the entry the other way roound ?
There shouldn’t be anything to correct - the “prepayments” nominal is for things where you have been invoiced in one year but you want to recognise the expense in the next year’s accounts (e.g. if you’ve been invoiced for three months rent but two of those months are in the next financial year). Your situation isn’t a prepayment in this sense, when you paid the supplier that created a debit on the creditors control account, which will sit on your year end balance sheet and then be cancelled out by the credit generated when you log the purchase invoice in the next accounting year.