Dear Friends
please suggest entry for following
Rent invoice Rs. 5000 for march 2018 received on 15-apr-18 after closure of books.
however payment made on 1-apr-18.
regards
1 Replies
CA Rakesh Joshi
(Chartered Accountant )
(1272 Points)
Replied 04 October 2018
Accrual method of accounting.
Since rent is an expense for you.. provide for rent expense in the month of March 2018 itself and that becomes the liability shown the balance sheet as on 31st March 2018.
In April 2018 the liability is discharged by making the payment.
Entry 1 - Provide for exepnse
Rent Expense A/c Dr.
To Provision for Rent Expense A/c
(Being rent is provided for the month of March 2018)
Entry 2 - While making the payment
Provision for Rent Expense A/c Dr
To Cash / Bank A/c
(Being rent paid for the Month of March 2018)
I think date of receipt of Invoice will make no difference in passing entry but make sure you have proper Invoice to substantiate when necessary.
Since rent is an expense for you.. provide for rent expense in the month of March 2018 itself and that becomes the liability shown the balance sheet as on 31st March 2018.
In April 2018 the liability is discharged by making the payment.
Entry 1 - Provide for exepnse
Rent Expense A/c Dr.
To Provision for Rent Expense A/c
(Being rent is provided for the month of March 2018)
Entry 2 - While making the payment
Provision for Rent Expense A/c Dr
To Cash / Bank A/c
(Being rent paid for the Month of March 2018)
I think date of receipt of Invoice will make no difference in passing entry but make sure you have proper Invoice to substantiate when necessary.
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