Quickbooks DOES allow for this entry. The way to handle it is very similar to accruing Pre-Paid Expenses to the following fiscal year. (Note: I am not giving advice on whether to use cash basis or accrual basis. These instructions assume you have determined that you are reporting (filing taxes) on accrual basis.)
1) Record the Bill as of the actual Bill Date.
You need to record the current year and previous year as separate line items.
2) The current year's portion of the expense, post to the correct "expense" account.
3) The previous year's portion of the expense you need to post to a special "liability" account. I named mine Accrued Expenses, a "current liability" account. *(Add this new account to your chart of accounts if you don't already have one.)
4) Then you need a General Journal Entry dated on the last day of the previous fiscal year. For me, it's 12/31/XXXX.
Debit: The correct "expense" account for the previous years amount. (This puts the expense in that year.)
Credit: The "current liability" account (Accrued Expenses) for the previous year's amount. (This records that you haven't paid it or received the bill yet, but you know the expense liability exists.)
That method keeps an accurate "Bill Date" and splits the expense to the time periods covered.
Alternatively, you CAN post the bill as of the last day of the previous fiscal year, but then you need to accrue the Pre-Paid Expense with a similar journal entry. Remember that with this "quick cheat", I call it, will have the wrong "bill date" recorded in QB but is a perfectly acceptable way to correctly record the expense if you are filing taxes as an accrual based entity. If you do it this way, here's how to make the entries.
1) Enter bill with a bill date of 12/31/XX, or the last day of your fiscal year.
You need to record the current year and previous year as separate line items.
2) The current year's portion of the expense (based on bill date), post to the correct "expense" account.
3) The future year's portion of the expense you need to post to a special "asset" account. I named mine Per-Paid Expenses, a "current asset" account. *(Add this new account to your chart of accounts if you don't already have one.)
4) Then you need a General Journal Entry dated on the last day of the current fiscal year (again based on the bill date entered). For me, it's 12/31/XXXX.
Debit: The "current asset" account (Pre-Paid Expenses) for the future year's amount. (This records that you already paid it or received the bill, but you know the bill covers a time period in the next fiscal year.)
Credit: The correct "expense" account for the future years amount. (This removes the expense for the current year.)
BOTH methods require a General Journal Entry and the Bill entry.
Happy Journaling :-)
