Ad-Free CAclubindia and Daily Updates on your mobile. Subscribe Now!

Invoice received next year

Shivani (Learner) (1881 Points)

04 October 2018

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

Reply
Follow
Share

1 Replies

Rakesh Joshi (CA Final) (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.