Journal Entry for Accrued Audit Fee

Journal Entry for Accrued Audit Fee

Journal entry for accrued audit fee of audit fee payable is a one of the most common example of accrued expenses or liability. The journal entry for accrued audit fee is recorded by debiting the audit expense and crediting the accrued audit fee.

Date	Particular	Ledger Folio	Dr.	Cr.
	Audit Fee		xxx
	Accrued Audit Fee			xxx

Audit fee liability is recorded on the bases of best estimate of audit fee. It is to be noted that sufficient information is available to record the accrued liability for audit fee i.e. agreement with the audit firm.

Audit fee is an important adjusting entry, because the audit fee relates to the current period, but shall be paid in future. It becomes more confusing, when the audit starts at the end of financial year and accrued audit fee is recorded as adjusting event.

Examples of Journal Entries Accrued Audit Fee

An agreed audit fee of 140,000 for conducting the current year audit (2017) shall be paid next year in 2018.

The above transaction of accrued audit fee may be recorded as under. The audit fee shall be debited as expense, while the accrued audit fee shall be credited as liability.

Date	Particular	Ledger Folio	Dr.	Cr.
31-12-2017	Audit Fee		140,000
31-12-2017	Accrued Audit Fee			140,000

Journal Entry for Payment of Accrued Audit Fee

Accrued audit fee is a liability and payment of such liability shall be recorded as under. The accrued liability shall be cleared or removed on payment of liability by debiting the accrued liability and cash would be credited being decrease in cash.

Date	Particular	Ledger Folio	Dr.	Cr.
01-01-2017	Accrued Audit Fee		140,000
01-01-2017	Cash			140,000