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Categories AgExpert Accounting AgExpert Analyst
Created by AgExpert Support
Created on Dec 6, 2014

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I asked this question as a reply to an earlier post but will ask again incase it doesn't come up - We are prepaying some seed and fertilizer this month. For tax purposes the expense is deductible as we are on a cash basis. So I want the prepaid expense to show up on my cash income statement but not my accrual income statement. One of the prepayments is going on an input loan and one is being paid from the chequing account.

How do I enter these transactions to have them show up on the cash i/s, balance sheet as a prepaid, and liability for the input loan? Last year I did the same but did a complicated transaction using the payables module just wondering if there is an easier way. Thanks!

  • ADMIN RESPONSE
    Feb 10, 2025

    Hi Allison!

    Generally speaking, you need to treat this kind of transaction as either a prepaid, or an expense. I'm not sure how the Accounts Payable would have been done on your books to make things work- you may have to look back at those particular transactions.

    This could become complicated, just due to the fact you are using input loans to finance the purchases. The system doesn't distinguish between cash from a bank account, and cash from a loan. To the program, if you claim the expense when paid from a loan, it is claimed as an expense overall, with no difference between cash and accrual.

    In its simplest form, the transaction will either be:

    1) a zero dollar withdrawal, claiming your expenses (EX) on the first line (more, if more inputs were paid for) and increasing your input loan (L+) on the final line, or
    2) a zero dollar withdrawal, increasing prepaid items (A+) on the first line, and increasing your input loan (L+) on the second line.

    If the transactions go further than that in a prior year, then I really can't comment, since I don't know how those entries were made to make things work.

    You may want to give me a call at some point, if neither of these options work for you. We may have to look closer at your particular scenario to see if there is a way we can make it work for you.

    Thanks!

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