cash and accural basis accounting

1. received management fee of $600,000 of which $10,000 is in advance

DR Bank $600,000
CR Management fee income $590,000
CR Management fee recevied in advance $10,000

Management fee of $10,000 is received in advance for the payment of next month, then it would be recorded as management fee received in advance in Balance Sheet item.

2, arrear of management fee of $5,000


DR Mangement fee receivable $5,000
CR Management fee income $5,000

Management fee of 5,000 is not paid in this month, then it would be recorded as Management fee receviable in Balance sheet item.

3. electricity bill of $6,000 not yet paid
DR Electricity & Water $6,000
CR Accured charges $6,000


$6,000 of electricity bills for this month is not paid , it should be recorded as accured expenses in Balance Sheet item.

2007-04-08 12:59:16 補充：
Under Cash accounting, just record HK$600,000 as a management fee income is enough.DR Bank $600,000CR Management fee income $600,000

Under cash basis, the total management fee received $600,000 is recognised as income and unpaid electricity expense of $6,000 will not be taken up in the account,

Under the accrual basis, Management Fee of $595,000 ( 600,000 - 10,000 + 5,000 ) be recognised as income and Management Fee Receivable be debited with $5,000, Management Fee received in Advance be credited with $10,000. and an accrued electricity bill will be racognised as an expenses and the accrued expenses be credited with $6,000.

The entries are

Dr. Mangement Fee ( Income Statement ) $ 5,000
Dr. Management Fee Receivable ( B/S ) 5,000
Cr. Management Fee Received in Advance ( B/S ) $10,000


Dr. Electricity ( Income Statement ) 6,000
Cr. Accrued Expenses ( B/S ) 6,000