On october 31 A fund accrued 2000.00 for legal fees. In November 2000 the fund received an invoice. for October 2008 legal fees for an amount of $2500 and paid the invoice on November. 15. Record the journal entry of october 31 2008 and to reflect transaction.
To record the journal entry on October 31, 2008, you would follow these steps:
1. Determine the account(s) affected: In this transaction, the "Legal Fees Accrued" account and the "Accounts Payable" account are affected.
2. Identify the type of accounts: "Legal Fees Accrued" is an expense account, which increases with a debit, and "Accounts Payable" is a liability account, which also increases with a debit.
3. Determine the debits and credits: Since the fund accrued $2000 in legal fees, the "Legal Fees Accrued" account should be debited for $2000 to reflect the expense. Simultaneously, the "Accounts Payable" account should also be debited for $2000 to acknowledge the liability.
4. Record the journal entry: The journal entry for October 31, 2008 would be as follows:
Legal Fees Accrued $2000
Accounts Payable $2000
5. Reflect the transaction in November: Since the fund received an invoice for $2500 on legal fees for October and paid the invoice on November 15, you would need to record the subsequent transaction in November.
To record the transaction in November, follow these steps:
1. Determine the account(s) affected: In this transaction, the "Accounts Payable" account and the "Cash" account are affected.
2. Identify the type of accounts: "Accounts Payable" is a liability account, which decreases with a credit, and "Cash" is an asset account, which also decreases with a credit.
3. Determine the debits and credits: Since the fund paid $2500 in legal fees, the "Accounts Payable" account should be credited for $2500 to reduce the liability. Simultaneously, the "Cash" account should also be debited for $2500 to reflect the decrease in assets.
4. Record the journal entry: The journal entry for the payment of the invoice on November 15, 2008, would be as follows:
Accounts Payable $2500
Cash $2500
By following these steps, you can accurately record the journal entry for October 31, 2008, and reflect the subsequent transaction in November.