Journal Entry for Expenses Payable

Journal Entry for Expenses Payable

In this article we would discuss the journal entry for expense payable or accrued expenses. It is important to note that under accrual concept of account the recognition of expense depends on it occurrence regardless of payment status.

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

It is pertinent to mention that expense and expense payable are two different heads of account. Expense payable is basically a liability. Thus the rules for recording the expenses and liabilities shall be applied to record expense payable.

There are two rules for recording the journal entry for expenses

·         Increase in expense is Debit.

·         Decrease in expense is Credit.

Similarly there are also two rules for recording the journal entry for liability.

·         Increase in liability is Credit.

·         Decrease in Liability is Debit.

The first rule of recording the journal entry of expense (i.e. increase in expense is debit) and first rule for recording the journal entry of a liability (increase in liability is credit) are applied to record journal entry for expense payable.

Examples of Journal Entry for Expenses Payable

1.    Rent of PKR 1400 for December 2016 shall be paid in next year.

2.    Salary of PKR 1600 for December 2016 shall be paid in January 2017.

3.    Stationary purchased is bill amounting 2300 has not yet cleared at year end.

Rent shall be debited being increase in expense and rent payable shall be credited being increase in liability. This journal entry is shown below

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

Salary shall be debited as increase in expense and salary payable would be credited being increase in liability. The recorded journal entry is shown below

Date	Particular	Ledger Folio	Dr.	Cr.
31-12-2016	Salary		1,600
31-12-2016	Salary payable			1,600

Stationary shall be debited and creditors (who supplied the stationary shall be credit being increase in liability).

Date	Particular	Ledger Folio	Dr.	Cr.
31-12-2016	Stationary		2,300
31-12-2016	Creditors			2,300