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June 17, 2020 at 10:32 am
Hello Sir John
First of all, excellent lectures. Very comprehensive and precise. I have a question in terms of the journal entries for the prepayment and accruals. I am mentioning them below. Would be great if you could advise if my understanding is correct and if the JE’s make sense and can be considered as the correct way of recording these transactions:
For Year ending Dec 2000
DEBIT Expense (Insurance) 1800 DEBIT Prepayment (Insurance) 1000 CREDIT Cash 2800
For Year ending Dec 2001 DEBIT Expense (Insurance) 1200 CREDIT Prepayment (Insurance) 1000 CREDIT Cash 1200
DEBIT Prepayment (Insurance) 1200 CREDIT Cash 1200
Also, can the year ending Dec 2001 entries be summarized as below: DEBIT Expense (Insurance) 2200 DEBIT Prepayment (Insurance) 1000 CREDIT Cash 2400
June 20, 2020 at 9:10 pm
This is not the subject in here, but I will show you one example of Journal Entry.
1 Jan 2000 to 31 December 2000
Cr Cash 2,800 Dr Insurance Expense 2,800 Dr Prepaid Insurance 1,000 Cr Insurance Expense 1,000
You need to learn double-entry bookkeeping. I hope this answers your question.
June 12, 2020 at 10:49 am
Very Clear. Thank you sir. I aspire to be very versed as you one day.
John Moffat says
June 12, 2020 at 3:19 pm
Thank you for your comment 🙂
February 28, 2020 at 2:11 am
December 6, 2019 at 11:31 am
why we took 1000 as previous prepayment from 1 jan to 31 jul instead of 1200?
February 24, 2020 at 8:20 am
From 1 Jan to 30 Jun, the prepayment was taken because it was paid for last year. As for the 1200, that didn’t include the first 6 months. We paid 1200 for 1jul 2001 to 30 Jun 2002.
October 6, 2019 at 9:40 am
It is still confusing for me that why prepayment of last year is still added in this year?
October 6, 2019 at 1:45 pm
If you prepaid last year it means that you paid already for part of this year. So the amount prepaid is part of this years expense.
August 16, 2019 at 5:39 am
How do we know that part of the insurance is prepayments at the end of the year if we only credit cash and debit insurance when the transaction happened?
August 16, 2019 at 8:58 am
Because always with insurance you will know what period you are paying for – it will be on the invoice!
August 16, 2019 at 9:28 am
I see, thanks a lot
August 16, 2019 at 9:27 am
oh, I’ve got that, thanks for this useful video
October 13, 2018 at 9:07 pm
do we only have four adjustments before the preparation of financial statements?
October 14, 2018 at 10:22 am
There are the four ‘standard’ adjustments that always need to be made. In addition, of course, any errors discovered will be corrected, but that is a separate issue – a correction rather than an adjustment.
Vivian A. Monye says
August 15, 2018 at 8:13 pm
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