Prepayment For Office Rent and Insurance

Effect on Balance sheet
DR CR
Debtors & prepayments (+) Cash at bank (-)

Prepayment for three months of office rental. The established practice for office insurance policy is to pay it in advance on an annual basis. The office rental contract stipulates that rent has to be paid three months in advance.
Prepayment
Rent & Rates    for 3 months for 1st month
Insurance    for 12 months for 1st month
Total Recognised Prepayment 12600
all
3300
1st month
Office Costs include Rent, Insurance and Maintenance.
Only Rent & Insurance are prepaid.
The maintenance cost is 300 per month.
Original values

Balance Sheet Original

ASSETS
Current Assets 767850
Bank 758550
Debtors and Prepayments 9300
Other Current Assets (Stock) 0
Fixed Assets 44000
TOTAL Assets 811850
LIABILITIES
Current Liabilities 44300
Creditors 44000
Accruals 300
Long Term Liabilities 0
Long Term Loan 0
Equity 767550
Shareholders' Equity 800000
Income Statement -32450
TOTAL Liabilities + Equity + Retained Earnings 811850
A. Income
Sale of Licences 0
Software Maintenance after Warranty, Recurrent Licencing Fees, Ongoing Technical Support 0
Unearned income 0
Currency Gains 0
Cost of Goods Sold (Purchase of Licences for Resale) 0
TOTAL INCOME: 0
B. Expenses
Software Upgrading 10000
Web Site Development 2500
Web Maintenance 4000
Technical Support 0
Marketing 0
Staff Salaries 8000
Consultancy and Accountancy 0
Office Costs 3600
General Costs 4350
Inventory Expense 0
Interest on loan 0
Currency Losses 0
TOTAL EXPENDITURE: 32450
Profit (Loss) from Operations
Corporate Tax 0
Dividends Paid 0
Net Profit (Loss): -32450
After changes

Balance Sheet New

ASSETS
Current Assets
Bank
Debtors and Prepayments
Other Current Assets (Stock)
Fixed Assets
TOTAL Assets
LIABILITIES
Current Liabilities
Creditors
Accruals
Long Term Liabilities
Long Term Loan
Equity
Shareholders' Equity
Income Statement
TOTAL Liabilities + Equity + Retained Earnings
A. Income
Sale of Licences
Software Maintenance after Warranty, Recurrent Licencing Fees, Ongoing Technical Support
Unearned income
Currency Gains
Cost of Goods Sold (Purchase of Licences for Resale)
TOTAL INCOME:
B. Expenses
Software Upgrading
Web Site Development
Web Maintenance
Technical Support
Marketing
Staff Salaries
Consultancy and Accountancy
Office Costs
General Costs
Inventory Expense
Interest on loan
Currency Losses
TOTAL EXPENDITURE:
Profit (Loss) from Operations
Corporate Tax
Dividends Paid
Net Profit (Loss):