Invoice recognition

[MXG336]

Hi, If I receive an invoice for electricity for 1 st January to 31 December on the 31 jan and 31 jan is also my year end, what are the accounting entries to treat this invoice?

 

[finleydesign]

Could be wrong but I would post it in the next year, as the invoice relates to the next years accounting period, not sure anyone will get upset with one day

Or post in the last year account, but it gets carried over

 

[Anna Chandley]

If the invoice is for 1 Jan 2012 to 31 Dec 2012 and your year end is 31 Jan 2012 then 1/12 of the total amount would be included as an expense in the year ending 31 Jan 2012 and 11/12 would be an expense in the year ending 31 Jan 2013.


Anna

 

[MXG336]

Thanks for your help Anna. So would the accounting entries be:
Dr. P&l
Dr. Prepayments
Cr. bank

?

 

[Anna Chandley]

The entries, ignoring VAT, would be

DR P&L - total invoice amount
CR Bank - total invoice amount

DR Prepayments - 11/12 invoice amount
CR P&L - 11/12 invoice amount

In the next financial year you reverse the prepayment so

DR P&L - 11/12 invoice amount
CR Prepayments - 11/12 invoice amount


Anna