Prepaid expense schedule ESTIMATE
The monthly amount to move from a prepaid asset into expense over the months the payment covers.
Result ESTIMATE
The payment and the expense are different months
A $1,200 annual insurance bill paid in January is $100 of expense for each of 12 months if you spread it evenly. On accrual books you debit prepaid insurance for $1,200 and credit cash when you pay. Each month you debit insurance expense for $100 and credit the prepaid. After six months, $600 is still an asset. On cash books, many small firms expense the whole bill when it is paid. The cash versus accrual page is that choice. This page is the even split if you are spreading it.
This is not straight-line depreciation. Depreciation spreads the cost of a long-lived asset and uses a salvage value. A prepaid is a payment for a service or coverage that expires. When the months run out, the asset should be zero. If it is not, the month-end close missed an entry.
Do not invent a partial month
If coverage starts on January 15, a strict daily split is not “÷ 12” for January. Enter the months you actually intend to recognize, or break January out by hand. The tax treatment of prepaid expenses has its own timing rules. This calculator does not apply them. It divides the dollars you typed by the months you typed.