To set up Prepayments, see this article.
Once prepayments have been set up, to view the suggested Prepayments Journal, go to Costs (top menu) > EACH MONTH: Review Prepayments (left sidebar). The suggested journal is provided in Section 1: Suggested Journal.
Section 1: Suggested Journal
This section looks only at costs identified as prepayments in SETUP/Identify Prepaid Expenses and which impact the time period selected (date range at top right of screen).
It summarises the amount the system believes needs to be journaled to the P&L and the Balance sheet based on
- costs and time periods identified as prepayments in SETUP/Identify Prepaid Expenses, combined with account allocations in Section 2 of this page, and
- existing journals in your accounting system
Where costs are booked first to the balance sheet, the suggested Debit and Credit are calculated using the contract value remaining for selected prepayment bills less prepayments currently on the balance sheet in the account you have identified for prepayments.
Section 2: Bills Identified as Prepayments
This section lists, by supplier, all the invoiced bills and line items you have identified as prepayments.
Where invoiced bills have initially been coded to a balance sheet prepayments account in your accounting system, this section is where you can identify which P&L account the cost should impact when expensed.
This section shows both the account to which the bill has been coded initially (“Account in Xero/QuickBooks” and also the account in which the related expense should be recognised, if different (that is, if initially coded to the balance sheet).
Total amounts to be expensed at dates after the end date of the report show in the Prepayments (Balance Sheet) column at the right side of Section 2.
Section 3: Existing Prepayment Journals (in Xero)
This section lists all existing journals in your accounting system which impact your selected prepayment accounts.
These existing journals are used in the calculation of the recommended journal in Section 1.
Section 4: Supplier Bills Expensed
This section lists bills identified as prepayments which have been received and booked to the P&L in the selected months. These are used in the calculation of the recommended journal in Section 1.
Accounting system Prepayments Balance
To quickly view the amount in Prepayments in your accounting system in order to compare it to the recommended amount in Section 2, see the note below Section 4.