It is easy to deal if the insurance is paid upfront, but we receive a SageCover invoices UPFRONT for the 12 month period but are paying them monthly by D/D. The Invoice date is 7th November. Year end is 31 March. The way I was posting it in Sage is as follows:
(Let's assume the Invoice amount is £432.00, i.e £36.00 p/m)
1. Post a Supplier's Invoice:
Dr Accruals <-- Cr Supplier £432.00
2. On a monthly basis:
Dr Insurance <-- Cr Accruals £36.00
3. At the Year End I have an obvious problem: My Accruals A/c has a DEBIT BALANCE, which doesn't look right, Or Does it?????
Guys, please HELP. I've got couple of a similar invoices (i.e.Car Insurance) and am stuck!. Some saying that it should be treated as a Prepayment, and it confused me completely.
Many thanks in advance.