Journal Entry for Accrued Expenses Paid

Journal Entry for Accrued Expenses Paid

In this article we would discuss the journal entry for accrued expenses paid. It is important to note that under accrual and matching concept of accounting the accrued expenses are recorded in a period to which these relate.

Journal Entry for Accrued Expenses

Expenses are debited as increase in expense and a liability is created by crediting the expense payable. Thus on one hand expense is charged and on second hand liability is created. Accrued expenses have been explained in more detail in my other article.

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

Journal Entry for Payment of Accrued Expenses

Now in next period, the liability created shall be paid. This liability payment shall be recorded by the following journal entry. Accrued expense (liability) is debited on payment due to decrease in liability and cash account is credited for decrease in asset.

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

The above scheme of journal entries shows that expense was charged in the right period by creating a liability and such liability was cleared in next period.

Example of Journal Entry for Accrued Expense Paid

Accrued Rent of PKR 1400 for December 2016 shall be paid in next year and the rent was accordingly paid in February, 2017.

Rent shall be debited being increase in expense and rent payable shall be credited being increase in liability.

Date	Particular	Ledger Folio	Dr.	Cr.
31-12-2016	Rent		1,400
31-12-2016	Rent payable			1,400

Rent payable (liability) is debited on payment and cash is credited for decrease in assets.

Date	Particular	Ledger Folio	Dr.	Cr.
28-02-2017	Rent payable		1,400
28-02-2017	Cash			1,400