Journal Entry: Operating Expenses (Wages, Salary, Rent)

Arjun EP

Published on: September 28, 2020

How to make journal entry for operating expenses

Every business firm has to do expenses to operate business. Daily, weekly, monthly, quarterly, half yearly and yearly regular expenses are operating expenses.

Administrative expenses (office expenses, operating expenses)

All the costs related to management and administrative of the organization is known administrative expenses.

These expenses are incurred day-to-day office activities.

The main expenses are office salary, management expenses, office expenses, office rent etc.

It is debited in journal entry and profit and loss account.

Selling and distribution expenses

Expense which is incurred or paid to sales of goods or service providing is known selling expenses.

This expense also includes distribution expenses.

It is also known secondary packaging expenses.

The main selling and distribution expenses are godown (warehouse) rent, advertisement, expenses of delivery van etc.

This expense is debited in journal entry and profit and loss account.

Expenses Paid

Salary account	Dr	salary paid to person	Increase in expenses
Wages account	Dr	wages paid to person	Increase in expenses
Rent account	Dr	rent paid to house owner	Increase in expenses
Telephone and internet bill account	Dr	telephone and internet bill paid	Increase in expenses
Stationery account	Dr	stationery purchased	Increase in expenses
Electricity and water bill account	Dr	electricity and water bill paid	Increase in expenses
Interest and commission account	Dr	interest and commission paid	Increase in expenses
Other expenses account	Dr	other expenses paid	Increase in expenses
To Cash account		paid in cash	Decrease in assets
To Bank account		paid by cheque	Decrease in assets
(Being- ….expenses paid by)

Journal Entry

In the book of …………

Date	Particulars		LF	Amount Dr	Amount Cr
	Salary account	Dr		xxxxx
	Wages account	Dr		xxxxx
	Rent account	Dr		xxxxx
	Telephone and internet bill account	Dr		xxxxx
	Stationery account	Dr		xxxxx
	Electricity and water bill account	Dr		xxxxx
	Interest and commission account	Dr		xxxxx
	Other operating expenses account	Dr		xxxxx
	To Cash account				xxxxx
	To Bank account				xxxxx
	(Being- ………….expenses paid by …………………….)

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Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =

PROBLEM: 9A

The following expenses are given you by KL Fancy House:

20 March, Stationery purchased for Rs 500.

30 March, Salary paid to staff for the month of Ashadh Rs 45,000.

30 March, Rent paid to house owner for the month of Ashadh Rs 12,000 by cheque.

Required: Journal entries

SOLUTION:

Journal Entry for American Style

Date		Debit $	Credit $
Mar, 20	Stationary account	150,000
	To Cash account		150,000
	To record purchase of stationary for cash

Journal Entry for European Style

Date			€	€
Mar, 20	Stationary account	Dr	150,000
	To Cash account			150,000
	To record purchase of stationary for cash

Journal Entries

In the book of KL Fancy House

Date	Particulars		LF	Amount Dr	Amount Cr
20 March	Stationery account	Dr		500
	To Cash account				500
	(Being- stationery purchased in cash)
31 March	Salary account	Dr		45,000
	To Cash account				45,000
	(Being- salary paid to staff in cash)
31 March	Rent account	Dr		12,000
	To Bank account				12,000
	(Being- rent paid to house owner by cheque)

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =

PROBLEM: 9B

The following expenses are given you by VK Suppliers:

28 April, Salary paid to Mr Prakash for the month of April Rs 15,000.

29 April, Rent paid to house owner Ms Sarita for the month of April Rs 10,000 by cheque.

30 April, Internet expenses paid to Broadlink Solution (P) Ltd Rs 1,500.

Required: Journal entries

Journal Entries

In the book of VK Suppliers

Date	Particulars		LF	Amount Dr	Amount Cr
28 April	Salary account	Dr		15,000
	To Cash account				15,000
	(Being- salary paid to Mr Prakash in cash)
29 April	Rent account	Dr		10,000
	To Bank account				1,000
	(Being- rent paid to house owner Ms Sarita by cheque)
30 April	Internet expenses account	Dr		1,500
	To Cash account				1,500
	[Being- internet expenses paid to Broadlink Solution (P) Ltd]