Student
175 Points
Joined April 2023
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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