Prepayment Accounting entries in Accounts Payables

When Prepayment Invoice is created.

Prepaid Expense A/c----------Dr
Liability A/c--------------------Cr

When Prepayment Invoice is paid.

Liability A/c---------------------Dr
Bank/cash A/c-------------------Cr

When Invoice is raised for Expense

Expense Charge A/c--------------Dr
Liability A/c----------------------Cr

When Prepayment is applied to invoice it reverses the original prepaid invoice accounts creates the following accounts

Liability A/c------------------------Dr
Prepaid Expense A/c--------------Cr