Prepaid State Taxes

@Petra23 

"We want to show to payment as a Prepaid Expense as of 12/31 and my Controller feels that we should also show state tax expense in December.  However, the expense is currently showing in January with the Prepaid in December. I'd like some thoughts on this topic and also if any further JEs are needed."

Your question is a bit confusing.  You can't have both an expense and a prepaid expense at the same time for the same payment, it's one or the other.  Both are a debit entry from an accounting perspective.  The way it is posted currently (prepaid in Dec. and expense in Jan.) sounds right.  Am I missing something?   

Yes, that's my issue exactly. We have the prepaid showing in December which is reversed in January. The expense shows up in January since that is when the check cleared. She feels that we should show the expense in December as well. From my understanding, that does not make sense from an accounting perspective. We can either book the Prepaid in December and Expense in January or we book the Expense in December and make an entry to accommodate the payment in early January.