Top Journal Entries Frequently Asked in RTR Processes

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We are Sharing With You RTR Most Asked journal entries . So kindly Check Out our http://www.castudynotes.com website and ALL the Best for Your upcoming Interviews.

CA STUDY NOTES

RTR Most Asked journal entry



1. Accrued Expense Journal Entry: When an expense is incurred but not yet paid by the company at the end of the accounting period.
Debit: Expense (e.g., Utilities Expense)
Credit: Accrued Expenses (Liability)
Example: The company incurs $5,000 in utilities for the month of December but will not pay it until January.
Debit: Utilities Expense $5,000
Credit: Accrued Expenses $5,000

2. Prepaid Expense Journal Entry: When a company pays for an expense in advance.
Debit: Prepaid Expense (Asset)
Credit: Cash or Bank
Example: A company pays $3,000 for an insurance premium for the next six months.
Debit: Prepaid Insurance $3,000
Credit: Cash $3,000
When the expense is recognized monthly:
Debit: Insurance Expense
Credit: Prepaid Insurance
Example: Each month, $500 of the prepaid insurance is expensed.
Debit: Insurance Expense $500
Credit: Prepaid Insurance $500

3. Accrued Revenue Journal Entry: When revenue is earned but not yet received.
Debit: Accrued Revenue
Credit: Revenue
After invoicing the client:
Debit: Accounts Receivable
Credit: Accrued Revenue
Ex: A company has earned $10,000 in service revenue for December, but the payment will be received in January.
Debit: Accrued Revenue $10000
Credit: Revenue $10000
Debit: Accounts Receivable $10,000
Credit: Revenue $10,000

4. Depreciation Journal Entry: Recording the depreciation of a fixed asset over time.
Debit: Depreciation Expense
Credit: Accumulated Depreciation (Contra-Asset)
Ex: A company records $2,000 in depreciation for a piece of equipment.
Debit: Depreciation Expense $2,000
Credit: Accumulated Depreciation $2,000

5. Bad Debt Journal Entry: Writing off bad debt that cannot be collected.
Debit: Bad Debt Expense
Credit: Accounts Receivable
Ex: A customer owes $1,000 but it is determined to be uncollectible.
Debit: Bad Debt Expense $1,000
Credit: Accounts Receivable $1,000

6. Deferred Revenue Journal Entry: When a company receives cash in advance for services or products to be delivered later.
Debit: Cash or Bank
Credit: Deferred Revenue (Liability)
Example: A company receives $8,000 in advance for services to be provided over the next 4 months.
Debit: Cash $8,000
Credit: Deferred Revenue $8,000
As the revenue is earned:
Debit: Deferred Revenue
Credit: Revenue
Ex: For the first month of service, the company recognizes $2,000 in revenue.
Debit: Deferred Revenue $2,000
Credit: Revenue $2,000

7. Interest Expense Journal Entry: Recording interest owed but not yet paid.
Debit: Interest Expense
Credit: Interest Payable
Example: A company owes $1,000 in interest at the end of the accounting period.
Debit: Interest Expense $1,000
Credit: Interest Payable $1,000

8. Inventory Purchase Journal Entry: When a company purchases inventory on credit.
Debit: Inventory (Asset)
Credit: Accounts Payable (Liability)
Example: A company purchases $6,000 worth of inventory on credit.
Debit: Inventory $6,000
Credit: Accounts Payable $6,000

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