Many thanks Adrien.
I think your explanation works except for a minor detail, after the
initial payment is exhausted all payments are after the fact.
Each month I submit a report of participant count for the prior month.
They will then send me a bill for the amount due.
I don't think there is anything prepaid regarding these subsequent
payments so I'm pretty sure I can just expense them.
Best,
Tom
------ Original Message ------
From: "Adrien Monteleone" <adrien.montele...@lusfiber.net>
To: "Gnucash Users" <gnucash-user@gnucash.org>
Sent: 12/15/2018 4:41:12 PM
Subject: Re: [GNC] How To Handle Prepayments
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
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