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  #1  
Old 10-14-2011, 11:48 AM
AirOne AirOne is offline
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Prepaid insurance dillema

So, I know how to post prepaid insurance as a general rule. However, at my company we obtain prepaid insurance from one company, but in order to pay for it we obtain financing from a seperate company. We pay a percentage of the total cost up front to the actual insurance company and then the finance company pays the remainder. As far as the insurance company is concerned, we have paid in full and we recieve the benfits every month. However, we continue to pay the finance company monthly for the principle plus interest. I don't know how to account for the total cost in Quickbooks as prepaid insurance AND account for the loan without causing a doubling effect of the cost of the insurance. Any ideas?
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Old 11-11-2011, 08:32 AM
AirOne AirOne is offline
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Anyone know?
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Old 11-11-2011, 12:33 PM
qbqcca qbqcca is offline
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Enter the Insurance Company's Bill into Accounts Payable charging it to your Prepaid Insurance G/L account.
This is the account which you should off-set your monthly Prepaid Insurance Journal Entry.

Record your up-front payment and apply it to the Insurance Company's bill in accounts payable.

The Finance Company part could be handled in this way.
1a) Enter a Credit Note to the Insurance Company to clear their account and off-set the amount to a G/L Account Insurance Finance Loan Payable (Other Current Liability)

---OR---


1b) When you enter the Insurance Bill into Accounts Payable charging it to your Prepaid Insurance G/L account, you could at the also deduct the Financed Part attributing it to Insurance Finance Loan Payable (Other Current Liability Account) making the Insurance Bill net to only up front payment you have to make.


2) Then when you make your payments to the finance company, you would attribute to Insurance Finance Loan Payable for the installment payment portion and expense the interest portion.

Hope this helps

Warren
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Old 11-11-2011, 02:14 PM
AirOne AirOne is offline
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Thanks Warren. That's helpful. If I follow the method listed, will it show the balance due to the finance company in the vendor center? It sounds like you are splitting the acct. The up front portion ending up in Insurance Expense (after the payment is made), and the remainder sitting in the Insurance Finance Loan Payable acct. If this is so it would show a zero balance for both the Insurance company and the Finance company in the vendor center correct?
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Old 11-11-2011, 04:11 PM
qbqcca qbqcca is offline
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Yes.

The Vendor Center is normally for Trade Suppliers.

Bank Loans and Car Leases are normally recorded as Other Current Liabilities, with the exception of course of the Long Term Portion of those Liabilities which are recorded in a G/L Account designated (Long Term Liability)

Long Term Liabilities are whose amounts which at your Fiscal Year end are not payable within the next Fiscal Year.


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Warren
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Old 11-11-2011, 04:40 PM
AirOne AirOne is offline
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So without the vendor center, how would you track billing times and accounts payable in QBs? My boss wants to be sure everything is tracked for easy reference to the money we owe.
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  #7  
Old 11-11-2011, 06:19 PM
qbqcca qbqcca is offline
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You should set-up both the Payment to the Finance Company & the Prepare Insurance Journal Entry as Memorized Transactions.

You define the number of times the entry is to be processed when you set it up.

And your good until next year.
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