Hello, to split is a good thing, but here is a better accrual accounting concept method.
There are two account receiving the payment.
- Insurance expense account(Expense)
- Insurance Prepaid account (asset) / ABC Insurance
There is also the bank/cash account involved and the Insurance provider (ABC Insurance).
Instead of the split method. Do the right thing by involving the two accounts.
In the same payment, use the two accounts
Insurance Expense — 250 (Expense)
ABC Insurance ---------250 (Asset)
In the beginning of the next period
Dt: Expense account
Ct: ABC Insurance
I don’t know what others may think, but split thing is not a proper thing. I don’t think it will at the end of the first period display the prepayment on the balance sheet which will be bad financial reporting. I am sure it will not present the prepayment under asset. The above method however will clearly show. This doesn’t make your work easy, but that is true financial reporting