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Prepaid expenses

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Querist : Anonymous

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Querist : Anonymous (Querist)
18 July 2014 Lets take a situation. An XYZ vendor has raised an invoice for Rs. 5000 for internet services provided for period of 1June - 31Aug. Lets assume today we have received bill for payment ie. 18 July. So what will be treatment in books...?

Internet Expenses A/c .....Dr....Rs.2667
Prepaid Expenses A/c.....Dr....Rs.2333
To Bank A/c...Rs. 5000
(Being internet expenses paid for period 1 june to 31Aug)

On 1 Sept we will pass entry.
Internet expenses A/c....Dr....Rs.2333
To prepaid expenses

Is this treatment correct? Pls guide.
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Vishnu Saboo

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Vishnu Saboo (Expert)
19 July 2014 not getting the calculation, you saying internet charges bill is for 01-06-14 to 31-08-14 that is 5000/-, on the another hand you suppose to post an entry in 1st sep.?
when you posting expenses for Jun to aug then where is question of prepaid?
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