I’m not sure I’m entirely following the timing exactly, but many insurances, and it looks like your’s falls in this category, are pre-paid.
Thus they are assets until they are ‘used’. So when you make the initial payment: Dr. Assets:Current Assets:Pre-Paid Assets:Insurance Cr. Assets:Current Assets:Cash/Checking You can handle that with a Vendor bill and Payment if you like. As the insurance is ‘used’: Dr. Expenses:Insurance Cr. Assets:Current Assets:Pre-Paid Assets:Insurance This can be handled with a manual or scheduled transaction as your situation dictates. (which could also be a vendor bill, if you didn’t use one for the initial payment) Subsequent payments are likely still in advance, and so would go to increase the pre-paid asset first and then when used, they are expensed. There is no need for involving A/P accounts or credit memos to adjust them. (unless you opt for the vendor bill route, but you still shouldn’t need credit memos) I had a thread some months back on a similar topic and the issue is something to consider: I receive a bill about a month in advance of the due date every six months for auto insurance. If I pay that bill early, or on time, I am gaining a ‘pre-paid’ asset to be used up over the next six months. My problem wasn’t using the bills feature to handle this, or the expensing (I just set up a scheduled transaction for that part) but that I couldn’t post the ‘advance’ bill without it posting to my assets right away. Yet, it isn’t an asset till I actually pay it. I was wanting to take advantage of the bills due reminder for this bill. I had to settle on waiting to post the bill until I actually make the payment and forgoing the reminder. That way, my assets weren’t inflated early. Otherwise, everything else works out fine. Regards, Adrien > On Dec 15, 2018, at 3:06 PM, tbalaban <tbalaba...@gmail.com> wrote: > > My Company pays an initial payment to our insurer at the beginning of each > policy year. As we incur insurance costs based on event participants, that > initial payment is charged. After it is exhausted we get a monthly bill for > the amount due. In no case do we ever get the initial payment back. > > I'd like to treat the initial payment as a credit to insurer's A/P account > then each month create a bill for the amount payable. > > Is this the correct way to handle such a transaction? > > Assuming it is, how do I credit the amount due from whatever account I > posted the initial payment to? > > In practice we pay the initial payment in February, the start of our paolicy > year. Usually, in April or May, the initial payment is exhaused and we have > to send more money to pay that month's bill. I'm not at all clear on how to > post this situation. > > I'd appreciate knowing how to do this in GNUCash as well as any comments on > the applicable general accounting rules. In Quickbooks I could debit or > credit A/R or A/P diectly and selects the customer or vendor required. Since > that capabiity does not appear to be available in GNUCash, how do I post it? > > Many thanks for your already generous help. > > > > -- > Sent from: http://gnucash.1415818.n4.nabble.com/GnuCash-User-f1415819.html > _______________________________________________ > gnucash-user mailing list > gnucash-user@gnucash.org > To update your subscription preferences or to unsubscribe: > https://lists.gnucash.org/mailman/listinfo/gnucash-user > If you are using Nabble or Gmane, please see > https://wiki.gnucash.org/wiki/Mailing_Lists for more information. > ----- > Please remember to CC this list on all your replies. > You can do this by using Reply-To-List or Reply-All. > _______________________________________________ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user If you are using Nabble or Gmane, please see https://wiki.gnucash.org/wiki/Mailing_Lists for more information. ----- Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
