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I am just starting out doing some bookeeping for a friend. She paid her 1st and last months rent plus a security deposit. How will I post the last months rent and the security deposit?Hello,Thank you for your inquiry.Both the prepaid rent and security deposits should be set up as Other Asset accounts. The initial transaction when payment is made would be:CREDIT Bank AccountDEBIT Prepaid RentDEBIT Rental Security DepositOn the date that the last months rent is being used you would prepare the following journal entry:CREDIT Prepaid RentDEBIT Rent ExpenseOn the date that the rental security deposit is received back and/or used you would prepare the following journal entry:CREDIT Rental Security DepositDEBIT Expense Account (for any amounts used)DEBIT Bank Account (for any amount left over)
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How should I record an estimated tax payment? As a prepaid Asset? And then adjust it when I pay the actual tax at the end of the year?Hi,Thanks for your question. If you are a sole proprietor paying your estimated tax payments out of your business account, the payments would be posted as an Owner's Equity Draw Sub-account as follows:DEBIT Owner's Draw: Estimated TaxesCREDIT Bank Account
(Sturgeon Falls, Ontario Canada)
How to post a prepaid insurance expense, or can I just post it as a one time expense when invoiced? The payments are made monthly over a one year period going into the next year.Nadeen
by Patsy Maxey
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