Hi MountainLady ,

Thanks for reaching out! Based on the guidance from this article on recording prepaid expenses, here’s an approach that includes steps adapted from the article:

Journal Entry Example for Prepaid Rent Opening Balance

1. Date: [Enter the date of the transaction]
2. Description: "Opening Balance for Prepaid Rent"

Steps:

1. Enter the Prepaid Rent:

   • Go to General Journal and create a new journal entry.
   • Debit the "Prepaid Rent" account for the amount (e.g., $1,000). This recognizes the prepaid rent as an asset on your balance sheet.

2. Offset with a Liability Account:

   • Credit an account such as "Accounts Payable" or "Opening Balance Equity" for the same amount to balance the entry.
   • If the prepaid rent was paid from a specific bank or cash account, you could use that as the offsetting account instead of Accounts Payable.

3. Adjust Monthly (Optional):

   • As you recognize the rent expense over time, you would adjust by crediting "Prepaid Rent" and debiting "Rent Expense" on a monthly basis.

By following these steps, you ensure that the prepaid rent is correctly recorded as an asset and later expensed over the appropriate periods. 

If this helps, please mark it as verified :)

Warm Regards,
Erzsi

Hi Mountain Lady:

I would suggest entering your total prepaid purchase amount through payables directly to the prepaid rent account. Once entered and posted you would on a monthly basis create a journal entry to record the expense (debit) and the prepaid rent (credit) reduction. I hope this answers your question!