{m}.{s}.1 For the sake of clarity we have shown previously only one prepayment. There will often be more than one expense prepaid at the year end. For example:

Year end 31 December 2008

Rent
2008 2008 
Sep 30   
Bank960  
    
    
[{m}.{s}a]
Insurance
2008 2008 
Nov 26   
Bank600  
    
    

 

Open/Close{m}.{s}.Q1
Open/Close{m}.{s}.Q2

Having calculated the prepayments they can then be put through using either one or two journal entries

One journal

These will be recorded by the journal entry:

2008 Dec 31
Dr
Cr
  Prepayments 740  
  Rent   240
  Insurance   500
to record closing prepayments    
[{m}.{s}b]

Two journals

If you find it easier you can of course put through two entries.

2008 Dec 31
Dr
Cr
  Prepayments 240  
  Rent   240
Closing rent prepayment    
[{m}.{s}c]
2008 Dec 31
Dr
Cr
  Prepayments 500  
  Insurance   500
Closing insurance prepayment    
[{m}.{s}d]

 

Rent
2008 2008 
Sep 30 Dec31 240
Bank960Prep'ts 
    
    
Prepayments
2008 2008 
Dec31   
Rent & Ins740  
    
    
Insurance
2008 2008 
Nov 26 Dec 31 
Bank600Prep'ts500
    
    

[{m}.{s}e]