Pre-payment Accounting entries

Prepayment Account

This account is debited when a prepayment invoice is
created on a supplier. This account defaults to
Prepayment invoice from Supplier Site

Following are accounting entries

D. Prepayment Accounting entries

1. When Prepayment Invoice is created in Accounts
Payable:-

Prepayment Account Dr
To Account Payable Liability Account Cr

2. When Prepayment Invoice is paid in Accounts
Payable:-

Account Payable Liability Account Dr
To Bank Account Cr

3. When Invoice is raised for Expense

Expense Charge Account Dr
To Account Payable Liability Account Cr


4. When Prepayment is applied at the time of remaining
invoice amt payment

Account Payable Liability Account Dr
To Prepayment Account Cr


5. When remaining invoice amt is paid in Accounts
Payable

Account Payable Liability Account Dr
To Bank Account Cr