Prepaid Expenses—Interest – Ford Online Accounting Manual

Assets

PREPAID EXPENSES—INTEREST	ASSET ACCOUNT
	1520

Interest paid in advance that applies to future accounting periods.

			Jrnl.	Dr.	Cr.

Three-month promissory note of dealership discounted at bank			CR
	Cash in Bank—General			1001
	Prepaid Interest			1520
		Notes Payable—Other—Short Term			2030

Monthly write-off of note discount			SE
	Interest—Excluding Vehicle & Mortgage			8740
		Prepaid Interest			1520

Purchase of Rotunda service equipment on twelve-month deferred monthly payment plan			G
	Prepaid Interest (service charge)			1520
	Parts, Service & Body Shop Equipment			1720
		Notes Payable—Other—Short Term			2030

Monthly amount due Ford Motor Company and amortization of service charge			2030
	Notes Payable—Other—Short Term			2030
	Interest—Excluding Vehicle & Mortgage			8740
		Prepaid Interest			1520
		Cash Sales—Clearing			1010

A subsidiary record, such as Form FMC 61, Prepaid and Accrued Expense Schedule, should support this account and should be used in computing monthly write-offs to expense.
For recording of purchases of Rotunda service equipment under a long term contract, see Account 1720, Parts, Service and Body Shop Equipment.