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PREPAYMENTS

  • 51 posts
  • # 115069

Hi everyone

I really can not get my head around Prepayments

I am hoping someone can help me because I know the correct answer but can not get to the figures:-

My company is VAT registered and the year end is 30th  Sept

I pay for a software licence for a year at a time and last paid on 31st Dec at a net cost of £2700, the balance on this account is currently £5380, what will the cost of the software licence be charged to the profit & loos account for the year.

Any help would be much appreciated in a simple format please - thank you

Stressed Mandy
  • 51 posts
  • # 115070

Mandy1975said: DONT WORRY EVERYONE - IVE FINALLY WORKED IT OUT - SIMPLES WHEN YOU KNOW HOW

“

Hi everyone

I really can not get my head around Prepayments

I am hoping someone can help me because I know the correct answer but can not get to the figures:-

My company is VAT registered and the year end is 30th  Sept

I pay for a software licence for a year at a time and last paid on 31st Dec at a net cost of £2700, the balance on this account is currently £5380, what will the cost of the software licence be charged to the profit & loos account for the year.

Any help would be much appreciated in a simple format please - thank you

Stressed Mandy

”
  • 14 posts
  • # 115170

Mandy1975 said:

“

Hi everyone

I really can not get my head around Prepayments

I am hoping someone can help me because I know the correct answer but can not get to the figures:-

My company is VAT registered and the year end is 30th  Sept

I pay for a software licence for a year at a time and last paid on 31st Dec at a net cost of £2700, the balance on this account is currently £5380, what will the cost of the software licence be charged to the profit & loos account for the year.

Any help would be much appreciated in a simple format please - thank you

Stressed Mandy

”

 Hi Mandy, i hope you're well. i've just seen your post and i'd really appreciate any pearls of wisdom that you're able to share. I'm really struggling with accruals and prepayments on BA6. Hope to hear back from you soon. Thanks in anticipation. Emma x
  • 51 posts
  • # 115177

Hi Emma

I still hate prepayments but i will try and explain to you:-

BUSINESS IS VAT REGISTERD AND FINANCIAL YEAR ENDS ON 30TH SEPT.

The companyt pay for a software license for a year at a time, last paid for some on 31st December at a net cost of £2700.  The balance on this account is currently showing £5380 - what will be the cost of the software licence that will be charged to the profit and loss account for the year.

SO 

take Balance on account of £5380 less paid to date of £2700 leaves £2680

 

take the £2700 and divide by 12 (as for a year) = £225 month

we have paid 9 months in financial year Jan - Sept = £225 x 9 = £2025

£2025 plus the balance above of £2680 = £4705

 

hope this is of some help but feel free to contact me - mandy.shelford@hardysherwood.com

 

good luck x
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