Advance bill received

We received utility bill for the month of June on 25.05.2023. What will be the accounting treatment and journal entries in books?
Replies (3)
Quick Summary
This discussion explains the accounting treatment for a utility bill received in advance for June on 25th May. The initial entry involves debiting Accounts Payable and crediting Utility Expense to recognise the liability. At the period's end, an adjustment is made by debiting Prepaid Expense (or Accrued Expenses) and crediting Utility Expense to reflect the portion applicable to the current period.

The accounting treatment for the utility bill received in advance for the month of June is as follows:

1. Upon receiving the utility bill on 25.05.2023:
   Debit: Accounts Payable
   Credit: Utility Expense

This entry recognizes the liability for the unpaid utility bill.

2. At the end of the accounting period (assuming it is a monthly period):
   Debit: Prepaid Expense (or Accrued Expenses)
   Credit: Utility Expense

This entry adjusts the expense by recognizing the portion applicable to the current accounting period (June) and recording the remaining amount as a prepaid expense or accrued expense. These journal entries reflect the proper accounting treatment for the utility bill received in advance for the month of June.

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Since you didn't pay it

Dr. Expense

Cr. Payables

When you clear it

Dr. Payables

Cr. Bank

it it does mpact your tax, keep the bill under suspension 

I don't know if GST Is payed by company while meeting expenses. Because it makes sense doesn't it? Input tax minus out put tax.

If your company or auditors pay purchase GST or expenditure GST, then you can make an entry. I hope other members can help with this transaction. 

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