Need help on how to record payment by cash to accrued liabilities in BS at the same time credit to P&L expenses? This is about electricity bills. (I have successfully recorded Hire purchase account with suspense interest, the other day) but this time I cannot get through with the same method.
I have bills on May 15 amounted to RM200 and in June RM800, however, I only make the payment on July 10 for RM200. I want my account to show the actual report, how do I record this?
Please help. Many thanks in advance
The normal way to do this is to setup your electricity provider as a Supplier
Then you record the purchase invoices (15 May for 200 and ?? June for 800) and post the amounts to the appropriate expense account in your P & L account (Power? Electricity? whatever you want to call it). The liability will show up in Accounts Payables under the supplier name as 1,000
The you record the payment of 200 on 10 July in your bank account and post it to the supplier’s account in Account Payables. This will reduce the liability amount to 800
but it will show up in account payable not designated accrued electricity in liabilities, right?
You would only put it in accrued liabilities if you have not created a supplier
Have you no supplier?
This is a most unusual way to account for your electricity expenses but …
You could use a journal entry to
May 9 Debit P & L account electricity (say) 200
Credit accrued liability account 200
Jun X Debit P & L account electricity (say) 800
Credit accrued liability account 800
Jul Payment from cash account and post to the accrued liability account 200
which will create the following
Debit accrued liability 200
Credit cash 200
But again, this is completely against the way you should be using Manager
I suggest you read the guides again
That seem a solution.
as long as it is not wrong for accounting, it’s all good.
it’s not wrong just bad accounting