Wondering if anyone has any experience or suggestions on handling this situation. When we submit our inventory balance for year end, if we have pre-paid for product in the old fiscal year that we will not received until the new fiscal year, our accountant advised us to put those amounts in an account called Prepaid Expenses that shows up under Assets. Is there a way to do this in Adagio Payables?

When we make a pre-payment in Adagio Payables, Accounts Payable is Debited and the Bank Account is Credited. Is there a way to debit Prepaid Expenses instead of Accounts Payable? As far as I know this setting is in the Company Profile and cannot be edited on the fly for one payment. Am I correct or is there a way to override the debit account?

If not, to achieve the correct accounting, should this pre-payment be followed by a journal entry to move the amount from Accounts Payable to Prepaid Expenses and then back again in the new year?

Any other ideas?

Hi Susan

There is no good way to debit Prepaid Expenses instead of AP. Your idea to make a journal entry and then reverse it in the new year is a good one.

Regards

Steve

Hi Susan,

Your method has the benefit of making it clear that there is a prepayment on the vendor file, so that the AP person doesn't inadvertantly pay the real invoice when it arrives.

You might also want to place an alert on the vendor file.

Is there a way we could improve the handling of this transaction if it occurs frequently?