Year End invoice for future services.

Question

Our web hosting is billed in advance by quarter. I'm about to enter an invoice from May 1 for May, June, July. Our fiscal year end is May 31, so only a third of this is an expense in the year being entered. 
 Is "prepaid expense" the correct place to put the other 2/3 even if it hasn't been "prepaid" yet?

Richard S. Ridings · Accepted Answer

Greg, I like your entry better than Jenn5353's. There are reasons why her entry could be used but in this case, I would treat it as a prepaid expense as you have done, rather than an accrual to be invoiced later as she has done. 
 Just don't forget to debit the GST Paid account when you post the general journal entry to the proper expenses account in June and July. The 1320 Prepaid account should go back to zero after July's entry if nothing else has been posted there.

Sage 50 Canada

Year End invoice for future services.

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