Is this journal entry correct?

The journal entry is decribing someone paying off a utilities bill in two installments.

I'm new to accounting so confused if this is correct, don't we want the Utilities Expense Account to become 0.00 by the end of the journal?

Attachment image

2 Answers

Relevance
  • 2 months ago

    The journals are correct. The first one posts the expense and records the liability (account payable). The next two show installment payments reducing the liability to zero.

    The balance on the expense account remains until the period end when it is transferred to the Profit and Loss account (Income statement).

  • David
    Lv 7
    2 months ago

    The entry looks correct as shown.  As to the Utilities expense, it does not disappear.  It grows over the course of the fiscal year at which time it zeroes out for the next fiscal year.  If the monthly utilities expense is 500, in the course of 12 months the balance on the account is 6000 (12x500)

    Source(s): 40+ years of experience.
Still have questions? Get your answers by asking now.