Expenses and payroll: journal entry worksheet
Name: Date:
Convention: United States (US textbooks)
Record each transaction as a journal entry: write each account in the Debit or the Credit column with its amount.
Paying the monthly rent
On March 1 a store pays the rent of its premises for March, $1,200.00, by check.
Accounts to choose from: Cash · Prepaid Rent · Rent Expense · Accounts Payable · Utilities Expense · Unearned Revenue
Account Debit Credit Paying six months’ rent in advance
On November 1 a company pays $9,000.00 by check for six months’ rent in advance (November through April).
Assumptions: The company records payments for future periods as an asset and expenses them month by month as they are used up.
Accounts to choose from: Rent Expense · Prepaid Insurance · Cash · Prepaid Rent · Accounts Payable · Unearned Revenue
Account Debit Credit Expensing one month of prepaid rent
On November 1 a company paid $9,000.00 for six months’ rent in advance (November through April) and debited Prepaid Rent. Record the adjusting entry on November 30.
Assumptions: The company prepares monthly financial statements and adjusts its accounts at the end of each month.
Accounts to choose from: Unearned Revenue · Cash · Prepaid Insurance · Rent Expense · Accounts Payable · Prepaid Rent
Account Debit Credit Receiving the electric bill
A store receives its electric bill for March, $460.00, payable on April 20.
Accounts to choose from: Utilities Expense · Accounts Payable · Cash · Accounts Receivable · Rent Expense · Prepaid Rent
Account Debit Credit Paying the electric bill
On April 20 a store pays by check the electric bill for March, $520.00, that it recorded on account when it arrived.
Accounts to choose from: Utilities Expense · Accounts Receivable · Rent Expense · Prepaid Rent · Cash · Accounts Payable
Account Debit Credit Paying the month’s salaries
On March 31 a company pays its employees the salaries for March, $6,400.00, by check.
Assumptions: Payroll taxes and withholdings are ignored in this item.
Accounts to choose from: Salaries Payable · Payroll Tax Expense · Employee Income Tax Payable · Cash · Prepaid Rent · Salaries Expense
Account Debit Credit Accruing unpaid salaries at year end
The December salaries of $8,500.00 will be paid to the employees on January 5. Record the entry needed on December 31.
Assumptions: Payroll taxes and withholdings are ignored in this item.
Accounts to choose from: Cash · Payroll Tax Expense · Salaries Expense · Employee Income Tax Payable · Unearned Revenue · Salaries Payable
Account Debit Credit Paying salaries accrued at year end
On December 31 a company accrued the December salaries, $9,200.00, which were unpaid. On January 5 it pays them by check.
Assumptions: Payroll taxes and withholdings are ignored in this item. The company does not use reversing entries.
Accounts to choose from: Accounts Payable · Salaries Payable · Payroll Tax Expense · Prepaid Rent · Salaries Expense · Cash
Account Debit Credit Monthly payroll with withholding and employer payroll taxes
Monthly payroll: gross salaries $3,000.00, federal income tax withheld $360.00, employees’ FICA taxes $229.50, employer’s FICA taxes $229.50. The net pay is paid by check today; the taxes withheld and all FICA taxes will be paid next month.
Assumptions: Unemployment taxes (FUTA, SUTA) are ignored.
Accounts to choose from: FICA Taxes Payable · Salaries Expense · Cash · Insurance Expense · Accounts Payable · Payroll Tax Expense · Salaries Payable · Employee Income Tax Payable
Account Debit Credit Recording the employer’s payroll taxes
The January payroll, already recorded, has gross wages of $12,000.00. Record the employer’s payroll taxes on it: FICA 7.65%, federal unemployment tax (FUTA) 0.6% and state unemployment tax (SUTA) 5.4%.
Assumptions: No employee has yet earned more than the FICA, FUTA or SUTA wage base for the year.
Accounts to choose from: Salaries Payable · Cash · Salaries Expense · State Unemployment Taxes Payable · Employee Income Tax Payable · FICA Taxes Payable · Payroll Tax Expense · Federal Unemployment Taxes Payable
Account Debit Credit Paying for advertising
A company pays a local newspaper $1,200.00 by check for advertisements published this month.
Assumptions: No sales tax applies to the advertising.
Accounts to choose from: Accounts Payable · Service Revenue · Cash · Supplies Expense · Advertising Expense · Prepaid Insurance
Account Debit Credit Paying an annual insurance premium in advance
On January 2 a company pays $1,800.00 by check for a one-year insurance policy on its premises, covering January 1 to December 31 of this year.
Assumptions: The company records insurance paid in advance in Prepaid Insurance and moves it to Insurance Expense month by month as the coverage expires.
Accounts to choose from: Accounts Payable · Cash · Rent Expense · Prepaid Insurance · Insurance Expense · Unearned Revenue
Account Debit Credit Expensing one month of prepaid insurance
On March 1 a company paid $2,400.00 for a one-year insurance policy (coverage March 1 to February 28 of next year) and debited Prepaid Insurance. Record the adjusting entry on March 31.
Assumptions: The company prepares monthly financial statements and makes adjusting entries at the end of each month.
Accounts to choose from: Insurance Expense · Rent Expense · Unearned Revenue · Cash · Accounts Payable · Prepaid Insurance
Account Debit Credit Recording office supplies used
During May a company used office supplies costing $360.00, according to its supply requisition records. Record the entry on May 31.
Assumptions: The company records supplies as an asset (Supplies) when it buys them and records the supplies used at the end of each month.
Accounts to choose from: Inventory · Cash · Supplies · Supplies Expense · Prepaid Insurance · Accounts Payable
Account Debit Credit Bank charges on a wire transfer to a supplier
A company pays a supplier of goods an invoice of $4,200.00, recorded earlier in Accounts Payable, by wire transfer. The bank charges a wire fee of $15.00, taken from the company’s account together with the transfer.
Assumptions: The bank fee bears no VAT.
Accounts to choose from: Cash · Accounts Payable · Interest Expense · Accounts Receivable · Notes Payable · Bank Service Charges
Account Debit Credit Paying quarterly interest on a bank loan
A company has a bank loan of $60,000.00 at 5% a year, with interest paid every three months. Today it pays the interest for the last three months from its bank account; the loan principal does not change.
Assumptions: Interest is calculated on the principal for exactly three months (3/12 of a year). No interest had been accrued for these months before today.
Accounts to choose from: Bank Service Charges · Cash · Notes Payable · Interest Expense · Accounts Payable · Interest Revenue
Account Debit Credit Accruing interest on a bank loan at year end
A company has a bank loan of $60,000.00 at 6% interest per year. Interest is paid every six months; the last payment was made 4 months before December 31. Record the interest accrued at December 31.
Assumptions: The principal has not changed since the last interest payment. Interest is computed in whole months: principal × rate × months / 12.
Accounts to choose from: Interest Receivable · Cash · Interest Payable · Interest Revenue · Interest Expense · Notes Payable
Account Debit Credit Receiving a telephone bill to pay later
A company receives its monthly telephone and internet bill for $120.00, all taxes included, payable in 15 days. It will pay it later.
Assumptions: The company records telephone and internet costs in Telephone Expense.
Accounts to choose from: Accounts Payable · Notes Payable · Cash · Advertising Expense · Accounts Receivable · Telephone Expense
Account Debit Credit Reimbursing the owner for a business trip
The owner of a sole proprietorship flew to a trade show in another state and paid the airfare and the hotel, $860.00 in total, with personal funds. Today the business reimburses the owner by check.
Assumptions: The trip was for business only.
Accounts to choose from: Cash · Owner’s Drawings · Accounts Payable · Travel Expense · Advertising Expense · Owner’s Capital
Account Debit Credit Paying income tax owed by a corporation
At last year’s year end a corporation recorded $7,600.00 of income tax still owed. Today it pays that amount to the IRS from its bank account.
Assumptions: The company is a corporation, so this is its own corporate income tax. (A sole trader’s personal income tax would be a private withdrawal, not a business expense or liability.)
Accounts to choose from: Income Tax Expense · Accounts Payable · Retained Earnings · Income Tax Payable · Employee Income Tax Payable · Cash
Account Debit Credit
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