Australia Invoice for future period


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Hi everyone .

I've received an invoice on 25/07/18 for August rent . Is is correct way to post that as prepayment and amortize on 31/08/18
even though we going to pay them on 31/08/18 ? it this is correct isn't that reflect the wrong creditors balance ? (overstated )

Initial recognition
25/07/2018
Cr Creditors 50,000
Dr Prepayment 50,000

31/08/2018
Cr Prepayment 50,000
Dr Rent Exp 50,000


Thanks for support .
 
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bklynboy

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Dont record anything in July since no payment made (cant have a prepayment if you did not pay). In August record rent expense and offset payable until paid.
 

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