A business has a balance due from a customer on its accounts receivable ledger, but also owes the customers business an amount on its accounts payable ledger for goods supplied. A contra entry is used to offset the two amounts, leaving a net amount outstanding to the customer.
Vacation entitlement which has been earned by an employee but has not been taken by the end of the accounting period, represents a liability to the business. The liability is recorded using a vacation accrual journal entry.
Vacation Accrual Journal Entry November 6th, 2016Team
Following a physical count, a business has consumable supplies on hand of 350. The accounting records before adjustment show supplies on hand of 500, and an adjusting entry is needed to record the amount of supplies used for the period.
Consumable Supplies Expense Recorded November 6th, 2016Team
A business has an estimated annual income tax expense of 14,000 due of profits for the accounting period. A demand for the amount has not yet been received from the tax authorities, and the expense has not been recorded in the accounting records. An accrued income tax adjusting entry is made in the accounting records.
A utilities bill will be recorded as an expense to the business. As the business is given credit by the supplier, the other side of the accounting equation is a liability to the supplier (accounts payable).
Purchasing services on account will be recorded as an expense to the business. As the services are purchased on account, the other side of the accounting equation is a liability to the supplier (accounts payable).
Purchase Services on Account November 6th, 2016Team
Unearned revenue is generated when a business supplies its services to a customer and the services are invoiced in advance.
For example, suppose a business provides maintenance services and invoices for annually in advance. At the time of invoicing the service has not been provided and none of the revenue has been earned, it therefore needs to be credited to the unearned revenue account.
Unearned Revenue Journal Entry November 6th, 2016Team
A business has been invoiced 500 for goods and takes a 2% cash settlement discount for early payment.
The original invoice would have been posted to accounts payable, so the balance before settlement on the suppliers account is 500. A 2% discount on 500 is 10, and the amount of cash the customer pays is therefore 490.
An NSF check is one which has been returned to a business by a bank due to lack of funds on a customers account. Since the business has already entered the check into their records, a journal entry is required to reverse the entry.
Accrued salaries are salaries which has been incurred but not yet recorded in the accounting ledgers at the end of the accounting period.
This accrued salaries journal entry example shows how to record an accrued expense for salaries when an employee has carried out work during an accounting period but has not been paid by the end of the accounting period.