ACCRUED EXPENSES

Adjustment entries are very essential at the end of each fiscal or accounting period to record  any expenses which have been incurred but not recorded in the account i.e. salaries and wages of employees,mark up on borrowed loan rent not paid for the last period up to date etc.these expenses are accumulated day by day but these may not be recorded before the end of the period these are also called UN recorded expenses.

i) ACCRUAL SALARIES/WAGES
Usually salaries and wages are payable at the end of a period or some pay after the end of the period salaries of the month are paid on the  5th or 10th of the next preceding month.wages are paid daily weekly and fortnightly at the end of the day week and for night one day after the period.It means that expired period salaries,wages etc are payable after the date at the end of the period on which we prepare income statement, therefore,the expenses for the period must be recorded in the income statement.Adjusting entries are recorded to include correct the total expenses and revenue in the income statement.

ILLUSTRATION:
a)Salaries Rs,9,700 for the last month not yet paid
b)Wages Rs.2,800 for the last fortnight are payable

Required Adjusting entries


a)   salaries expense             9,700
               salaries payable                9,700  
      ___________________

b)   wages expense                2,800
               wages payable                   2,800
     ___________________


II)ACCRUAL OF MARK-UP EXPENSES
Mark up on bank loan,mark up on notes/bill payable are usually paid at the end of the period or along with the notes/bill face value.other information on June 30.

ILLUSTRATION :
Mark up on bank loan payable     Rs.  6,50 
Mark up on notes payable         Rs.    4,50
Required Adjusting entries

  

 Mark up expenses                             6,50
            Mark up  payable                                        6,50
__________________________


   Mark up expenses                           4,50
            Mark up payable on notes payable             4,50     
___________________________________


III)ACCRUAL OF OTHER EXPENSES
 Transporting charges Advertising expense,utility charges (Telephone,electric,gas charges)etc.usually paid when bills are received for payment but at the time of preparing the income statement which are due but not paid must be included in the respective expenses account for the period such as on december31

ILLUSTRATION:
Advertising expense unpaid Rs.22,700 for the last period
Transporting bills outstanding Rs. 8,25    
Telephone bills yet not received for the last period   Rs.4,250
Electric consumed during the period and bill not yet received Rs.1,375
Required Adjusting entries

Dec 31  Advertising expense                     22,700
                     Advertising payable                                22,700
        _____________________________
        Transporting expense                          8,25
               Transporting expense payable                       8,25

        Telephone expense                           4,250
               Telephone expense payable                           4,250
        ________________________________
        Electric expense                               1,375
               Electric expense Payable                              1,375
        _______________________________