Thread: Accruals for Expenses

I am not a professional accountant, but would like some help on an issue that i am trying to resolve for our small business.

We are trying to close our monthly books on the 5th of each month for the previous month. I would like to enter our telephone bill as an accrual since I won't receive the bill until after we close our books.

If you look at the following example, 1) is this the correct way to enter an accrual and 2) is it acceptable to have a negative on the income statement? In this example, our income statement would show telephone expense of $-200.

Example for telephone:
July 31, 2009 – Accrual for July
Debit Expense $1000.00
Credit Accruals $1000.00

August 01, 2009 – Accrual Reversal
Debit Accrual $1000.00
Credit Expense $1000.00

August 20, 2009 – Actual Bill for July 2009
Debit expense $500.00
Credit AR $500.00

August 31, 2009 – Accrual for August
Debit expense $200.00
Credit Accruals - $200.00

You are correct in your accruals - Once your receive the invoice, you can adjust the accrual accordingly.