Write Off Accrual Income Journal Entry

Write Off Accrued Income or Accrued Revenue entry is recorded in order to cancel the effect of previously adjusting entry recorded for it.

There are two methods to write off accrued income and both gives the equal results:

1. By Recording Reversing Entries

2. By Recording Write Off Journal Entry

1. When we record adjusting entry for accrued income or income receivable, then we record the following entry as shown below:

                                   Accrued Income a/c  XXX

                                                                  Income a/c  XXX

                                         (Income Accrued for the Period)

At the start of new accounting period, we reversed the above entry as shown below:

                                    Income a/c  XXX

 

                                                     Accrued Income a/c  XXX

 

                                             (Accrued Income Reversed)

 

When we actually received the amount from investing company, then following entry is recorded:

                                Cash a/c / Bank a/c  XXX

 

                                                             Income a/c  XXX

 

                                                        (Revenue Earned)

2. For second method, firstly we record the adjusting entry as in case of first method and then record the following entry to write off accrued income or revenue:

                                          Cash a/c / Bank a/c  XXX

 

                                                                       Accrued Income a/c  XXX

                                               (Income Now Actually Earned)

As accrued income is a current asset for the business, so when it is actually received from investment company, then we credit it in order to remove it from books of accounts as we, now, actually, earned revenue and debit cash or bank account.