10-09-2010 08:41 AM
Would enter the whole invoice amount through Purchases, making sure to split the amount over 2 lines for the Stamp Duty component which does not GST in it and when the instalments are paid each month or quarter then use Pay Bills to apply the instalment payment against the invoice until it is cleared. The GST will record on each instalment made in that period not on the whole invoice, if you report on a Cash Basis. It will also show you how much is left to pay.
Hope this helps
11-09-2010 10:42 AM - last edited on 12-09-2010 11:14 PM by Paul_Durie
This should really be recorded in your liabilities section of the Balance Sheet, as purchases are for trade creditors and not insurance and ATO liabilities. You will usually find(90% of the time) that insurance funding by instalments is done by a financing company and therefore have an interest component. The entry is therefore done via a general journal entry with the interest added to the liability and an unexpired interest account set up and the insurance amount put to prepaid expenses (an asset account). You will also usually find that the instalments are 10 and not 12. Therefore you have a entry set up for 10 repayments and you then need another entry set up to expense out the monthly insurance amount (12 entries). Your Accountant is the best person to advise you how the entries should be done.
11-09-2010 12:14 PM - last edited on 12-09-2010 11:16 PM by Paul_Durie
Qld Workcover payments are generally not funded by a finance company. It is an interest free arrangement made within Qld Workcover and the business and therefore it is not paid in advance by a finance company. Therefore your suggestion that it is not a creditor is not correct in this case. If however it was a normal insurance repayment scheme as you have suggested, which the business has signed an agreement with a finance company then your situation applies.
20-10-2010 10:40 AM
Thanks for that Kaye, didn't realise this was Qld workcover. Over here in WA they get charged interest on the funding as it is not done by the insurer.
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