Outstanding expenses is also known due, payable, to be paid or unpaid.
When work completes within an accounting year but not paid is known outstanding expenses.
In next accounting year, it should be paid.
These outstanding expenses may be on operating expenses, selling and distribution expenses and financial expenses.
Outstanding Expenses
Salary# account To Cash account To Bank account To Outstanding salary (Salary payable) (Being- salary paid and payable) |
Dr |
salary paid expenses paid in cash paid by cheque payable but not paid
|
Increase in expenses Decrease in assets Decrease in assets Increase in liabilities |
Journal Entry
In the book of …………
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
Expense account (by name) To Cash account To Bank account To Outstanding* expense (Expense payable; by name) (Being- salary paid and still payable) |
Dr |
|
xxxxx
|
xxxxx xxxxx xxxxx |
Keep in Mind (KIM)
Payable mean expenses have incurred but payment is not paid. Outstanding* = due = payable = to be paid = unpaid Salary# is supposed transaction. |
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PROBLEM: 10
The following transaction is given you by GK Importer (P) Ltd:
5 Jan: Interest Rs 15,000 is unpaid to City Finance Company.
10 Jan: Outstanding commission expenses $2,000
20 Jan: Insurance is to be paid $8,000.
29 Jan: Salary payable $30,000.
30 Jan: Wage paid $15,000 and still payable $2,000.
31 Jan: Advertisement paid $8,000 and outstanding advertisement $2,000.
31 Jan: Rent due to house owner Mr Pathak $12,000.
Required: Journal entries
SOLUTION:
Journal Entry for American Style
Date |
|
|
Debit $ |
Credit $ |
Jan, 5 |
Interest account Interest payable account To record interest payable to City Fin Co |
|
15,000
|
15,000
|
Journal Entry for European Style
Date |
|
|
€ |
€ |
Jan, 5 |
Interest account Interest payable account To record interest payable to City Fin Co |
Dr |
15,000
|
15,000
|
Journal Entries
In the book of GK Importer (P) Ltd
Date |
Particulars |
|
LF |
Amount Debit |
Amount Credit |
5 Jan |
Interest account To Outstanding interest (Interest payable) (Being- interest is payable to City Finance Company) |
Dr |
|
15,000 |
15,000 |
10 Jan |
Commission account To O/s commission (Commission payable) (Being- commission is outstanding) |
Dr
|
|
2,000 |
2,000 |
20 Jan |
Insurance account To O/s insurance (Insurance exp. payable) (Being- insurance is outstanding) |
Dr
|
|
8,000 |
8,000 |
29 Jan |
Salary account To Outstanding salary (Salary payable) (Being- salary payable) |
Dr
|
|
30,000 |
30,000 |
30 Jan |
Wages account (total) To Cash account To Outstanding wage (Wage payable) [Being- wages paid and payable) |
Dr
|
|
17,000 |
15,000 2,000 |
31 Jan |
Advertisement expenses account (total) To Cash account To O/s advertisement (Ad. expense payable) (Being- advertisement paid and payable) |
Dr
|
|
10,000 |
8,000 2,000 |
31 Jan |
Rent account To Outstanding rent (Rent payable) (Being- rent due to house owner Mr Pathak) |
Dr
|
|
12,000
|
12,000
|
***********
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PROBLEMS AND ANSWERS |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
Basic Problem: 10 OUTSTANDING EXPENSES
The following expenses are given you by GK Exporter (P) Ltd:
1 March: Rent due to house owner $15,000.
5 March: Interest $35,000 is unpaid.
10 March: Outstanding commission $5,000
20 March: Discount is to be paid $10,000.
29 March: Salary payable $25,000.
30 March: Advertisement expense paid $8,000 and still payable $3,000
Required: Journal entries
***********
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