| Equity Issues and discussions related to accounting for expenses, revenues and other areas that relate to owner's or stockholders equity. |
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06-26-2008, 07:02 AM
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#1 (permalink) |
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Status: n00b
Join Date: Jun 2008
Posts: 3
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Expense discovered after month-end close
Please help with the following problem!
"You are in the process of doing month-end close, and you just received a phone bill (which arrived late) which refers to the accounting period that is being closed. Is any adjusting entry needed?" Thank you for any help. |
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06-26-2008, 03:32 PM
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#2 (permalink) |
Status: Owner/Administrator
Join Date: Mar 2008
Location: Berkeley, CA
Posts: 160
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The questionis, did you already accrue the expense in the first place?
For accruing an expense like a phone bill... the following should be done... Before receiving the phone bill: Dr. Phone Expense Cr. Accounts payable After the bill arrives: Dr. Accounts payable Cr. Cash
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Zahid H. Lilani |
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06-27-2008, 05:56 AM
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#3 (permalink) |
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Status: n00b
Join Date: Jun 2008
Posts: 3
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Why do i need to credit cash, if i haven't actually paid the bill yet?
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06-27-2008, 03:50 PM
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#4 (permalink) |
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Status: Owner/Administrator
Join Date: Mar 2008
Location: Berkeley, CA
Posts: 160
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I mention above that After the bill arrives you
Dr. Accounts payable Cr. Cash I assumed that once you get the bill you will pay it... was I wrong?
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Zahid H. Lilani |
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