I am having trouble recording entries for a pre-paid expense (Insurance) and a Debit Note
I have created a Test company and entered a few transactions to see if I can understand what I am doing wrong.- I added 20,000 to bank account posted to Retained Earning on 1 Jan 2020
I have an invoice from an Insurance company for the year 1 July 2020 to 30 June 2021 whereas my financial year is 1 Jan - 31 Dec
The cost is € 100 per month so the initial invoice was for € 1200 on 1 July 2020
I negotiated a rebate for two months which was granted - I entered a Debit Note on 1 Sept 2020 for € 200
I paid the balance of the amount due on 1 Oct 2020 € 1,000
At the year end, I entered a journal entry on 31 Dec 2020 to transfer € 600 to pre-paid expenses
At the start of the new year, I entered a journal entry on 1 Jan 2021 to transfer from pre-paid expenses to Insurance for 2021
The transactions are
Purchase invoice
Debit Note
Payment
Journal entry 31 Dec
Journal entry 1 Jan
P & L 2020 and 2021
B/S 2020 and 2021
Cash flow report
My comment is that I would have expected the Cash Flow Statement to show
Any comments?