Journal Entry for Expenses

Journal Entry for Expenses

Journal entry for expenses may be recorded with simple rule i.e. increase in expense is debited and decrease in expense is credited.

Journal Entry for Increase in Expenses

Other name of incurring the expense is increase in expense, we would debit the expense according to rule for recording the journal entry for expense i.e  (increase in expense is debited) and credit the other aspect either cash or bank or payable.

Journal entries for increase in expense may be explained with three examples

1.    Salary paid in cash 20,000.

2.    Salary transferred through bank 30,000.

3.    Salary payable to employees 15,000

In all three transactions, we would debit the salary (as increase in expense is debited).

for recording the journal of first transaction , the salary would be debited as increase in expense and cash would be credited as decrease in cash (decrease in asset is credited).

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

In second transaction journal entry would be recorded by debiting the salary again being increase in expense and the bank account would be credited, because this time payment is made through bank.

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

Third transaction would be recorded by debiting the salary expense being increase in expense and crediting the salary payable. (Increase in liability). It is to be noted that salary and salary payable are two different heads of account; salary is an expense, while salary payable is a liability.

Date	Particular	Ledger Folio	Dr.	Cr.
01-01-2017	Salary		15,000
01-01-2017	Salary payable			15,000

Journal Entry for Decrease in Expenses

Sometime we need to decrease or reduce the expense, for example an expense is wrongly recorded by excess amount in the books of account, now we have to correct the over recorded expense. This correction is made by crediting the expense by excess recorded amount .

For example a rent paid for building amounting 12,000 was wrongly recorded in the books of accounts as 15,000. We would correct the wrongly recorded rent by crediting the Rent account with amount of 3000 (to decrease the expense) and debit the cash with same amount.

Date	Particular	Ledger Folio	Dr.	Cr.
01-01-2017	Cash		3,000
01-01-2017	Rent			3,000