An expense account journal entry is used to record any expenses incurred by a business, such as rent, utilities, salaries, or other operational costs that are related to a profit & loss account or income & expenditure account Expenses reduce a company’s net income and it is a recorded as debits in the company’s books, while cash or accounts payable (liability) is credited.
Here are some examples of expense account journal entries for different types of expenses:
1. Journal Entry for Rent Expense
Let’s say a company pays $1,000 for rent in cash.
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| 09/06/2024 | Rent Expense A/c Debit | 1,000 | |
| 09/06/2024 | To Cash A/c | 1,000 |
Explanation:
- Rent Expense will debited because it increases the company’s expenses.
- Cash will credited because the company paid cash, reducing the cash balance.
2. Journal Entry for Utility Expense
A company incurs $500 in utility expenses but has not paid the bill yet. The amount is recorded in accounts payable.
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| 09/06/2024 | Utility Expense A/c Debit | 500 | |
| 09/06/2024 | To Accounts Payable A/c | 500 |
Explanation:
- Utility Expense will debited because the company incurs an expense.
- Accounts Payable will credited as a liability since the company has not yet paid the utility bill.
When the company pays the utility bill:
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| 09/06/2024 | Accounts Payable A/c Debit | 500 | |
| 09/06/2024 | To Cash A/c | 500 |
Explanation:
- Accounts Payable will debited to reduce the liability when the bill is paid.
- Cash will credited to reflect the outflow of money.
3. Journal Entry for Salary/Wage Expense
Let’s assume a company owes its employees $2,500 in wages, but the payment is due at a later date.
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| 09/06/2024 | Salary/Wage Expense A/c Debit | 2,500 | |
| 09/06/2024 | To Salaries Payable A/c | 2,500 |
Explanation:
- Salary/Wage Expense will debited because it represents the cost of employee wages.
- Salaries Payable will credited as a liability since the amount is not yet paid.
When the salaries are paid:
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| 09/06/2024 | Salaries Payable A/c Debit | 2,500 | |
| 09/06/2024 | To Cash A/c | 2,500 |
Explanation:
- Salaries Payable will debited to eliminate the liability once payment is made.
- Cash will credited to reflect the outflow of cash.
4. Journal Entry for Advertising Expense
A company pays $800 in cash for advertising services.
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| 09/06/2024 | Advertising Expense A/c Debit | 800 | |
| 09/06/2024 | To Cash A/c | 800 |
Explanation:
- Advertising Expense will debited to record the cost of the advertisement.
- Cash will credited since the payment was made in cash.
5. Journal Entry for Office Supplies Expense
A company purchases $300 worth of office supplies on credit.
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| 09/06/2024 | Office Supplies Expense A/c Debit | 300 | |
| 09/06/2024 | To Accounts Payable A/c | 300 |
Explanation:
- Office Supplies Expense will debited as the supplies are consumed for office use.
- Accounts Payable will credited because the company owes the supplier.
Summary of Expense Account Journal Entries:
In all of these examples:
- Expenses are always debited to reflect the increase in the company’s expenses.
- Either cash or accounts payable will credited to show how the expenses were financed (whether paid in cash or accrued as a liability).
These are just a few examples of expense account journal entries that businesses commonly encounter.