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Post Info TOPIC: Dealing with an invoice spanning two quarters
Turner


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Dealing with an invoice spanning two quarters
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Hi everyone,

I'm new to this forum, and also just started up as a self-employed bookkeeper. Forgive me if the following question is obvious, it's just that I don't want to make a mistake with my first clients accounts!

I'm putting together the accounts for my client for the 3 months to September 07, and there is an invoice and payment for £1,200 for rent of their office. The invoice covers the months of August, September and October. There is no VAT on the invoice, but I'm not sure how to deal with it. I know I need to apply the accruals concept, so would I include just 2 months worth of the rent in this quarter, and then include 1 month when I do the next quarters accounts? If so how do I do this in practice as I also need the bank to balance? Very confused......????
confused.gif

Cheers!

Turner

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Accountsguy


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Hi Turner, welcome to The Book-keepers Forum!

Re your question, you need to enter the bank payment as normal i.e. credit bank and debit rent paid in the Profit and Loss. You then need to account for the prepayment by crediting the rent a/c with £400 (£1200 x 1/3) i.e. one months rent, and debiting a prepayment account in the balance sheet. Then next quarter you will need to reverse this journal and if applicable account for the next quarters prepayment in the same manner.

All the best,

Guy

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Turner


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Hi Guy

Thanks for your help. Just couldn't get my head round it! Oh well, at least I know what to do for next quarter.

Cheers,

Turner

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