Outstanding Expenses in Journal Proper

 

Meaning of Journal Proper

Journal proper refer to the special types of journals which occur occasionally.

These are also known by subsidiary journals.

There are certain types of transactions which are not recorded in other subsidiary books but for the systematic recording.

Systematic recording of all such transactions are made under journal proper by following rules of double entry system of book-keeping.

Some examples of such transactions can be given as below:

Opening entries

Closing entries

Transfer entries

Adjustment entries (outstanding, prepaid, accrued, advance income)

Rectification entries

No special journal (free sample, loss by fire etc)

Rare transaction

  

Outstanding Expense

Outstanding is also called due, payable, accrued, owing expenses or to be paid.

These expenses are incurred in the business but not yet paid.

These are to be considered as expenses.

Some examples are outstanding salary, outstanding interest, outstanding rent, outstanding wages etc.

It is debited in profit and loss account and is shown in liabilities side of balance sheet.

 

PROBLEM: 5A

Extracted information of ABC Traders:

Salary payable $/₹/Rs 60,000 for the month of June 30

Required: (1) Journal entry; (2) Show in profit and loss account and balance sheet 

 

Journal Entry

In the book of ABC Traders

Date	Particulars		LF	Amount	Amount
June 30	Salary account           To Outstanding salary account (Being- salary payable or due)	Dr		60,000	60,000

 

Profit and Loss Account

Particulars		Amount	Particulars	Amount
To Salary        Add: Payable	Nil +60,000	60,000

 

Balance Sheet

Liabilities	Amount	Assets		Amount
Current liabilities: Salary payable	60,000

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PROBLEM: 5B

ABC Traders following extracted information:

October 31: Wages paid Rs 125,000 and still payable Rs 20,000.

Required: (1) Journal entry; (2) Show in profit and loss account and balance sheet 

Journal Entry

Journal Entry

In the book of ABC Traders

Date	Particulars		LF	Amount	Amount
Oct 31	Wages account           To Cash account           To Outstanding wages account (Being- wages paid and payable)	Dr		145,000	125,000 20,000

 

Trading Account

Particulars		Amount	Particulars	Amount
To Wages        Add: Payable	125,000 +20,000	145,000

 

Balance Sheet

Liabilities	Amount	Assets		Amount
Current liabilities: Wages payable	20,000

 

Keep in Mind (KIM)

Payable mean expenses have incurred but payment is not paid. Outstanding* = due = payable = to be paid = unpaid

 

PROBLEMS AND ANSWERS

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

Basic Problem: 5          OUTSTANDING EXPENSES

The following expenses are given you by GK Exporter (P) Ltd:

1       March:       Rent due to house owner Rs 15,000.

5       March:       Interest Rs 35,000 is unpaid.

10     March:       Outstanding commission Rs 5,000

20     March:       Discount is to be paid Rs 10,000.

29     March:       Salary payable Rs 25,000.

30     March:       Advertisement 8,000 paid and still payable Rs 3,000      

Required: Journal entries

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