Good morning, @RossKline.
Thanks for reaching out to the QuickBooks Community for support. I'm happy to lend you a hand with recording the prepaid expense.
Before we begin, please know that it's always best to consult with your accounting professional before making any changes to your company file. If you don't have an accountant, don't sweat it. You can find one here in our Resource Center.
First, you'll want to create an account to track the prepaid expense. Generally, this is an Other Current Asset account. Here's how:
- From the Company menu, choose Chart of Accounts.
- In the Chart of Accounts window, right-click anywhere, then click on New.
- In the Choose Account Type window, select the Other Account Types drop-down, then tap on Other Current Asset.
- Hit Continue.
- Enter the Account Name (Example: Prepaid Expenses) and other details, then select Save & Close.
Once you've completed these steps, you'll need to enter the payment to the vendor using the newly created account. Then, you can create a memorized journal entry to allocate one month or a quarter of the expense. Here's how:
- From the QuickBooks Company menu, choose Make General Journal Entries.
- Enter the appropriate date for the first period. You can either use your own entry number or allow QuickBooks to auto-assign one.
- Debit the Expense account and credit Prepaid Expenses for the appropriate percentage of the total payment (1/6 if 6 months, ¼ if quarterly for a year). You can include an appropriate memo if you choose.
- Press Ctrl-M on your keyboard to memorize the transaction. Assign it a name (Example: Umbrella Insurance), and choose Automatically Enter. Choose how often you want the entry recorded and the date of the next transaction. Also, indicate the number of remaining entries.
- Hit OK.
Now that you've covered the Journal Entries, the entries will record according to the frequency you selected, reducing the Prepaid Expenses account each period. The balance in the Prepaid Expenses account should be zero at the end of the coverage period.
For additional details about this process, check out Record and allocate Prepaid Expenses.
I'm only a reply away should you have any questions. Take care!
