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Accounting expenses

CA P KARTHIKA (Chartered Accountant) (715 Points)

02 May 2009

I have a doubt in my client office they receive telephone bills for the period like 10.03.09-9.04.09, so far they have made only one journal to book the expense, but during the close of the books can they apportion march month expense in march and april month expense in april month like apportioning expenses for respective month? But usually clients post entries on the basis of 1 for 1 i.e. booking journal at the month end and corresponding payment at the date of payment say at beginning of the next month!!! which would be more correct???

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2 Replies

Srinivas (IT Professional) (64 Points)
Replied 02 May 2009

Originally posted by :KARTHIKA
"	I have a doubt in my client office they receive telephone bills for the period like 10.03.09-9.04.09, so far they have made only one journal to book the expense, but during the close of the books can they apportion march month expense in march and april month expense in april month like apportioning expenses for respective month? But usually clients post entries on the basis of 1 for 1 i.e. booking journal at the month end and corresponding payment at the date of payment say at beginning of the next month!!! which would be more correct???	"

Hello Karthika

You can apportion the amount in March and April proportionately if the telephone bill period may be eg. 10/03/09 to 09/04/09

Entries: Tel Bill Say Rs. 3100

Date 31/03/2009

Telephone Exp A/c Dr Rs.2200 (22 days for March and 9 days for April)

To Provision for Exps. A/c Cr Rs.2200

And on payment of telephone bill in April 2009

Entry will be

Telephone Exps A/c Dr Rs. 900

Provision for Exps A/c Dr Rs.2200

To Bank A/c Cr Rs.3100

This is case the user (date entry operator) has always to keep a track to divide the amount proportionately as per days.

As per my view I always preferred the second option as mentioned below:

If the Bill period comes between two months like 10/05/09 to 09/06/09 or 10/03/09 to 09/04/09 etc. then user can pass the entry as follows

Bill Period 10/05/09 to 09/06/09

Entry : Telephone Exps a/c Dr Rs.3100

To Bank A.c Cr Rs.3100

This entry can be passed for all 11 months upto Feb

But when in comes to March then the User has to pass entry as follows

31/03/2009

Telephone Exp a/c Dr Rs.3100 (With full bill value. Do not apportion)

To Provision for Exp Cr Rs.3100

On Payment Date say 24/04/2009

Provision for Exps Dr Rs.3100

To Bank A/c Cr Rs.3100

This will help the user to track the outstanding liabilities with paid yet easily

Hope you got the answer.

Dear friends please clarify me if I am wrong.

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CA P KARTHIKA (Chartered Accountant) (715 Points)
Replied 04 May 2009

Originally posted by :Srinivas

Hi Srinivas,

ya u r correct since most of our client office receives tel ph bills beyond the bill period they just pass one journal and payment entry... so in such circumstances other than apportioning the expenses, we can credit outstanding liablties a/c as on 31.03.09 and pass pymt entry in april month which will be more relevent....