Accrued Expense Example

Example 2

On December 16, 20x1, Entity B hired a new staff with a monthly salary of $5,000.

Monthly salary is paid on the 15th of each month.

Prepare journal entries on the following dates:

December 16, 20x1

Salaries expense

2,500

   Salaries payable

2,500

[Note]

Salaries expense for the period from December 16 to December 31, 20x1

$2,500 salaries expense recognized on December 31 is accrued expense, since expense is recognized before cash is paid.

January 15, 20x2

Salaries expense

2,500

Salaries payable

2,500

   Cash

5,000

[Note]

Salaries expense for the period from January 1 to January 15, 20x2

Salaries payable for the period from December 16 to December 31, 20x1