I have been using journal entries to record prepaid expenses.
Scenario:
1 Oct I made a prepayment of R100.
4 Oct I was invoiced for the actual services of R11.50 (including VAT)
On Quickbooks online:
Journal entry 1 (1 Oct):
Dr Prepaid expense 100
Cr Bank 100
Journal entry 2 (4 Oct):
Dr Expense 10
Cr Prepaid Expense 10
[Note: system asks for VAT type next to the journal entries and I chose standard 15%, at the bottom it shows total is R11.5]
When I went to check my VAT report, journal entry 2 is present however the VAT amount is R0.
When I check my prepaid expense balance it shows R90 (instead of R88.50)
