274 Prepaid Other

Assets

Prepaid Expenses

Synopsis

Account 274 is established to record the amount of payments for Other goods and services that are paid in advance.

Debits

Credits

The amount of other expenses of the business paid in advance

The expired portion of other expenses

Example 1

Record the payment of next month’s rent in advance in the amount of $25,000.

Journal: Cash Disbursements

Entry:		Debit	Credit
Account 274	Prepaid Expenses – Other	$25,000
Account 202	Cash in Bank		$25,000

Example 2

Record the payment of a maintenance contract on the copier machine in the amount of $4,200.

Journal: Cash Disbursements and Purchase

Entry:		Debit	Credit
Account 274	Prepaid Expenses – Other	$4,200
Account 202	Cash in Bank		$4,200

Example 3

Record the monthly expense of the maintenance contract on the copier machine in the amount of $350.

Journal: Standard Journal

Entry:		Debit	Credit
Account 090-09	Repairs – Equipment – General & Administrative	$350
Account 274	Prepaid Expenses - Other		$350

Comments

A debit balance represents the unexpired portion of other expenses of the business paid in advance, such as:

a. Advertising

b. Rent

c. Maintenance Agreements

Note:

Sub-accounts should be created for each category recorded in this account. Prepayments for Advertising such as annual “Yellow Page” costs, long-term billboards, etc. should be classified together. Separate sub-accounts for Prepaid Rent and Maintenance Agreements are recommended.