Write Off Accrued Liabilities Journal Entry

 

Writting off accrued Liabilities journal entries means to close down or remove Accrued liabilities or Accrued Expenses Accounts from business records , offset or cancel the effects of previously recorded adjusting journal entries.

There are two methods to cancel the effect of accrued liabilities account which are given below:

 

1. By Recording Reversing Entry

2. By Recording Write Off Journal Entry For Accrued Liabilities

1. For first method, we record a Reversing Entry at the start of new accounting for previously recorded adjusting entry of accrued liabilities and then record the entry for actual amount paid.

When we record accrued liabilities, then following adjusting entry is recorded for any accrued liability as shown below:

                                    Expenses a/c  XXX

 

                                                          Accrued Expenses a/c / Accrued Liabilities a/c  XXX

 

                                               (Expenses Accrued for the Period)

 

At the start of new accounting period, we reversed the above entry and record the entry for actual amount of expenses paid as shown below:

              Accrued Expenses a/c / Accrued Liabilities a/c  XXX

 

                                                                                          Expenses a/c  XXX

 

                                                        (Accrued Expenses Reversed)

 

When we actually paid, then we record following entry as shown below:

                                                 Expenses a/c  XXX

 

                                                                          Cash a/c / Bank a/c  XXX

 

                                                              (Expenses Paid)

 

2. For second method, firstly we record adjusting entry and then the entry to write off accrued expenses. So, we record the following entry:

                      Accrued Expenses a/c  XXX

 

                                                           Cash a/c / Bank a/c  XXX

 

                                      (To Write Off Accrued Liabilities for the Period)

 

Note: The final result of these two methods must be equal when we compare the two results with each other.

For Example, Salaries of Rs. 100000 not paid to staff for the month, then we record Accrued Salaries or Salaries Payable or Outstanding Salaries Account on the basis of Accrual Concept and record the following adjusting entry:

(Assuming Second Method) 

                                                  Salaries a/c  100000

  

                                                                     Accrued Salaries a/c  100000

 

                                                   (Salaries Payable for the Month)

When we actually paid salaries to our staff on the next month, then we record the following entry to write off accrued salaries account as shown below:

                                        Accrued Salaries a/c  100000

 

                                                                        Cash a/c / Bank a/c  100000

 

                             (Paid Salaries For Cash / Bank Previously Accrued for the Month)