Question
Accounting on the Balance Sheet for a prepaid expense payment
I'm trying to balance the figures for prepaid insurance.
initial entry
i've credited cash asset 60 and debited prepaid insurance asset 60 - balance sheet is balanced
end of first month
i credit the prepaid insurance asset 5
i credit the insurance expense
but now my balance sheet is out of balance as i have nothing on the right to account for it.
i've exhausted all results in google which tell me to put it back in to cash but it's not some magic insurance policy which i don't pay for so that's not logical.
at the moment, i've assigned an equity account called Insurance expense and set it to negative. bit is that the correct way??
initial entry
i've credited cash asset 60 and debited prepaid insurance asset 60 - balance sheet is balanced
end of first month
i credit the prepaid insurance asset 5
i credit the insurance expense
but now my balance sheet is out of balance as i have nothing on the right to account for it.
i've exhausted all results in google which tell me to put it back in to cash but it's not some magic insurance policy which i don't pay for so that's not logical.
at the moment, i've assigned an equity account called Insurance expense and set it to negative. bit is that the correct way??