Journal Entry for Expenses paid in Cash

Journal Entry for Expenses paid in Cash

Journal entry for cash expenses or expense paid in cash may be recorded by debiting the expense and crediting the cash. The expense is debited being increase in expense and cash is credit being decrease in asset.

Date	Particular	Ledger Folio	Dr.	Cr.
01-01-2017	Expenses		xxx
01-01-2017	Cash			xxx

It is important to remind that above transaction is recorded under the first rule for expense recording i.e. (increase in expense is debit). There are two rules for recording the journal entries of expenses, however, for recording the cash expense, only the first rule shall be relevant and applied. Rules for recording the journal entry for expense are listed below;

·         Increase in expense is Debit.

·         Decrease in expense is Credit.

It is also important to mention that there are also two rules for recording the journal entry for asset. However the second rule (decrease in asset is credit) is relevant for recording the journal entry for payment of cash expenses, because payment decreases the asset.

·         Increase in asset is Debit.

·         Decrease in asset is Credit.

Examples of Journal Entry for Expenses paid in Cash

1.    Rent paid in cash 10,000.

2.    Salary paid in cash 20,000.

3.    Stationary purchased in cash 5,000.

4.    Repairs bills paid in cash 7,000.

Rent shall be debited being increase in expense and cash is credit.

Date	Particular	Ledger Folio	Dr.	Cr.
02-12-2017	Rent		10,000
02-12-2017	Cash			10,000

Salary would be debited as increase in expense and cash account would be credited being decrease in asset.

Date	Particular	Ledger Folio	Dr.	Cr.
03-01-2017	Salary		20,000
03-01-2017	Cash			20,000

Stationary account is debited and cash account is credited under the rules for recording the journal entry for expense and cash.

Date	Particular	Ledger Folio	Dr.	Cr.
05-12-2017	Stationary		5,000
05-12-2017	Cash			5,000

Repair shall be debited by and cash shall be credited. Repair is debited being increase in expense, while cash account is credit for decrease in cash.

Date	Particular	Ledger Folio	Dr.	Cr.
01-01-2017	Repair		7,000
01-01-2017	Cash			7,000

The above examples show that journal entry for cash expenses is very simple i.e. expense is debit and cash is credit.