Initial Recording of Prepayment
When making the initial prepayment, follow these steps to record it correctly in the system:
Step 1: Create AP Invoice Entry Create a new invoice in the AP Invoice Entry tool, selecting the appropriate vendor and entering the full prepayment amount. During this step, ensure you:
- Choose a Prepaid Expense asset account for the distribution
- Enter the complete payment amount
- Include relevant reference numbers and dates
Step 2: Distribution Setup In the distribution Line tab, you'll need to:
- Debit the Prepaid Expense asset account
- Credit the appropriate cash or payable account
- Verify the distribution balances correctly
Recording Periodic Expenses
As you utilize the prepaid expense over time, you'll need to record the appropriate portion of the expense in each accounting period. This process involves:
Creating the Periodic Entry
- Access the AP Invoice Entry tool
- Create a new invoice entry
- Reference the original prepaid invoice
- Set both the applied amount and total invoice amount to zero
- Enter the distribution details:
- Credit the Prepaid Expense asset account
- Debit the related expense account for the period's portion
Purchase Order Prepayments
When dealing with purchase order prepayments, follow these specific guidelines:
Initial Setup
- Verify the G/L account assigned to the Payable Deposit in Purchase Order Options
- Ensure proper configuration in the Additional Tab of Purchase Order Options
Recording Steps
- Write a manual check posting to GL Payable Deposit Account, or create an AP Invoice to the vendor
- Create the purchase order with the prepayment amount on the Totals tab
- Process the receipt of goods normally
- Complete a Receipt of Invoice entry against the PO
- Update all relevant registers
Accounts Receivable Prepayments
For situations involving customer prepayments, the system offers a structured approach:
Creating the Prepayment Entry
- Navigate to Accounts Receivable > Cash Receipt Entry
- Enter the customer number and check number
- Input the prepaid amount in the Amount Received field
- Access the Lines tab
- Enter a future invoice number
- Confirm the prepayment status when prompted
Applying Prepayments to Invoices
- Open Cash Receipt Entry
- Enter relevant batch details
- Set the Amount Received to zero
- On the Lines tab:
- First line: Select the existing prepayment
- Second line: Specify the invoice for prepayment application
- Ensure the Posting Balance and Total Posted fields equal zero
Best Practices and Considerations
Record Keeping
- Maintain detailed documentation of all prepaid transactions
- Regularly reconcile prepaid expense accounts
- Monitor unused prepayment balances
System Integration
- Remember that some processes are not fully integrated
- Manual updates may be required in certain modules
- Verify all related accounts are properly balanced after entries
Period-End Procedures
- Review all prepaid expense allocations
- Ensure proper expense recognition in each period
- Verify remaining prepaid balances are accurate
Troubleshooting Common Issues
Zero Amount Applications When applying zero amounts to prepayments, ensure that:
- All distribution entries balance
- Reference numbers are properly maintained
- System tracking of unapplied prepaid invoices is accurate
Balance Verification After completing prepaid expense entries:
- Check Customer Maintenance records
- Verify invoice amounts are properly reduced
- Confirm prepayment applications are correctly reflected
Reporting and Tracking
To maintain effective oversight of prepaid expenses:
Regular Monitoring
- Review prepaid expense asset account balances
- Track amortization schedules
- Verify proper expense recognition timing
Financial Reporting
- Ensure proper classification on balance sheet
- Monitor expense recognition on income statement
- Maintain supporting documentation for audit purposes
System Requirements and Updates
To ensure smooth processing of prepaid expenses:
Software Configuration
- Verify proper account setup in the chart of accounts
- Confirm user permissions for prepaid expense processing
- Maintain current software updates and patches
Data Validation
- Regularly backup system data
- Verify posting accuracy through trial balance reviews
- Monitor system logs for processing errors
This comprehensive approach to managing prepaid expenses in Sage 100 ensures accurate financial reporting and proper expense allocation across accounting periods. Following these structured procedures helps maintain the integrity of your financial records while providing clear documentation for audit purposes.
Citations: [1] https://communityhub.sage.com/us/sage100/f/core-financial-modules/93239/feedback-on-my-process-of-entering-prepaid-expenses [2] https://www.accountingadvice.co/apply-ar-prepayment-to-an-invoice-in-sage-100-erp/ [3] https://www.dwdtechgroup.com/sage-100-mas-90-200/processing-prepayments-on-a-purchase-order-in-sage-100/ [4] https://www.acutedata.com/sage-100-prepay-invoice-accounts-receivable/ [5] https://www.caserv.com/2016/06/23/sage-100-how-to-apply-a-prepayment-to-an-invoice-in-accounts-receivable/ [6] https://www.greytrix.com/blogs/sagemas/2020/01/29/how-to-apply-prepayment-to-an-invoice-in-sage-100-erp/