Provision For Telephone Expenses Journal Entry

Provision for Telephone Expenses is an estimated amount due in the next month. For Example, the Telephone Expenses for the April Rs. 5000 will be due in May. The amount of Rs. 5000 is estimated which may be change or remain the same. As it is payable by the company to utilities companies, so it is a Current Liability to be shown on Balance Sheet.

By considering the above example, we may create provision for telephone expenses by recording the following adjusting entry as shown below:

                               Telephone Expenses a/c  5000

                                                                     Provision for Telephone Expenses a/c  5000

                                         (Provision For Telephone Expenses Created For The Month)

When the company actually paid the telephone expenses on May, then the above entry is reversed by recording Reversing Entry and following telephone expenses entry will be made as shown below:

                                               Telephone Expenses a/c  5000

                                                                                     Cash a/c / Bank a/c  5000

                                                 (Paid Telephone Expenses For The Month)