Explain Prepaid Expenses In Amortization ?

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prepaid expense is the due payment for the current period paid previous year!!!which is accounted on early month which to be paid this term.

A journal entry is posted for the expenses incurred over that period accounting to the schedule at the end of each accounting period. -Prepaid expense amortization schedule ledgerliberty. -The final amortization schedule, can be used to create amortization schedule, but involves the knowledge of formulas

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 Prepaid Expenses In Amortization

At the time a payment is made that represents a prepayment of an expense, a prepaid account such as Prepaid Insurance is debited and the Cash account is credited. This records the prepayment as an asset on the company’s balance sheet. An amortization schedule is also established that corresponds to the actual incurring of the expenses associated with the prepayment, or the consumption schedule for the prepaid asset.

At the end of each accounting period, a journal entry is posted for the expense incurred over that period according to the schedule. This journal entry credits the prepaid asset account on the balance sheet, such as Prepaid Insurance, and debits an expense account on the income statement, such as Insurance Expense. Doing so records the incurring of the expense for the period and reduces the prepaid asset by the corresponding amount.