I pay £35 per month to my accountant as payment on account. I paid a total of £415 including an initial deposit using Sage Accounts.

When I moved over to Solar I entered an opening balance to the Audit & Accountancy Fees account of £415 and paid a further £105 recorded on Solar, so the total balance on the account is now £520.

I received an invoice from the accountant for £449.40. However I cannot work out how I pay the invoice from the money on account to leave my balance as £70.60 in Audit & Accountancy Fees.

Hi Sharon,

Is your 'Audit & Accountancy Fees' account an asset or a an expense account?

Thanks

Hi Mark,

It's an expense account

Regards

Sharon

Hi Sharon,

In that case I would expect that the balance of the 'Audit & Accountancy Fees' would be £449.40 after you record the invoice. I don't think you can allocate the prepayments to the 'Audit & Accountancy Fees' because you should only record an expense when your accountant performs the work. Here's how I would record your transactions:
1. Create a new asset account called 'Accounting Prepayments' with an opening balance of £415
2. Record a General Transaction from the Cheque Account to the Accounting Prepayments account to represent the payments on account
3. Record your accountant's invoice for £449.40 allocated to the 'Audit & Accountancy Fees'
4. Record an invoice payment for £449.40 with the Paid From Account set to 'Accounting Prepayments'

However, I'm not an expert on this topic. I recommend you check this approach with your accountant as he may prefer a different method.

Regards,