How you apply the payment properly depends on what type of situation you are in. Following are instructions on how to handle both prepaid interest types.

Perform these entries via Tool # 492 Member Account Adjustment (Full):
 
If the prepaid interest is a positive entry:

Type	Amount	Description	Interest	Offset G/L#	Offset Location
92	$X.cc	PREPAID INT	$X.cc	INT G/L	BR#
85	$X.cc	PREPAID INT	$X.cc	INT G/L	BR#

$X.cc is the prepaid interest amount
The first transaction puts it into the interest bucket and the second transaction pays it off and adds it to the YTD paid bucket.
 
If the prepaid interest is a negative entry:

Type	Amount	Description	Interest	Offset G/L#	Offset Location
92	$Y.cc	PREPAID INT	$Y.cc	INT G/L	BR#
85	$X.cc	PREPAID INT	$X.cc	INT G/L	BR#

$Y.cc is a full month of calculated interest amount
$X.cc is the prepaid interest amount
The first transaction puts it into the interest bucket and the second transaction pays it off and adds it to the YTD paid bucket.
 
**** IMPORTANT *****
Because you are manually calculating the first month of interest, you must also advance the next interest calc date by a month.  Do this via Tool # 20 Update Account Information, adjusting the value in the Next Interest Calc date field forward one month.  Also, whether the prepaid interest is satisfied through an account adjustment or through the teller line as "interest only,” you will also need to manually clear out the Partial Pay field via that same tool.