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    kristi_12's Avatar
    kristi_12 Posts: 5, Reputation: 1
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    #1

    Jun 25, 2012, 01:23 PM
    Accounting Problem Involving Cheque and Journal Entry
    If I purchased a service plan (cellphones) for my employees of 40 people at a cost of $931 per month and I paid for this plan on June 5 with a cheque, the invoice was given to me on May 31 and it stated that it was due on June 15, should I include this in the journal entry? For transactions occurring up to May 31st? I am a little confused.

    Also, if a question asks me that the source reductions were paid on June 15 do I have to include this in the general journal for the month of May?

    Thanks
    paraclete's Avatar
    paraclete Posts: 2,706, Reputation: 173
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    #2

    Jun 25, 2012, 06:18 PM
    Quote Originally Posted by kristi_12 View Post
    If I purchased a service plan (cellphones) for my employees of 40 people at a cost of $931 per month and I paid for this plan on June 5 with a cheque, the invoice was given to me on May 31 and it stated that it was due on June 15, should I include this in the journal entry? for transactions occurring up to May 31st? I am a little confused.

    Also, if a question asks me that the source reductions were paid on June 15 do I have to include this in the general journal for the month of May?

    Thanks
    You have not told us the date the phones were first acquired and used. If we assume 31 May then no value has accrued to the month of May and you will record the transaction in May as a prepayment with Accounts Payable included in May

    What are source reductions?
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    #3

    Jun 25, 2012, 07:04 PM
    Sorry, the phones were purchased and used on May 1st.
    paraclete's Avatar
    paraclete Posts: 2,706, Reputation: 173
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    #4

    Jun 25, 2012, 10:04 PM
    Then you will include it in accounts payable in may with debit to telephone expenses
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    #5

    Jun 26, 2012, 04:28 AM
    Thank you.
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    #6

    Jun 26, 2012, 04:41 AM
    [/QUOTE]What are source reductions?[/QUOTE]

    I think the amounts sent to general receiver.
    If employees start working on May 1st and I pay their wages on May 31st but pay their source reductions of both employees and employers on June 15 than I am assuming that I do not have to include this amount in the journal entry as you pointed early but how do I create a liability for this? Since the CPP, EI and Employees Income Tax were already as payables if I were to pay the source reductions than I would decrease these amounts (CPP,EI, Tax) from the payables and credit Cash but this is only June 15 when I pay with cheque. I think I do not have to include the source reductions payment than in the journal entry?
    paraclete's Avatar
    paraclete Posts: 2,706, Reputation: 173
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    #7

    Jun 26, 2012, 05:26 AM
    What are source reductions?[/QUOTE]

    I think the amounts sent to general receiver.
    If employees start working on May 1st and I pay their wages on May 31st but pay their source reductions of both employees and employers on June 15 than I am assuming that I do not have to include this amount in the journal entry as you pointed early but how do I create a liability for this? Since the CPP, EI and Employees Income Tax were already as payables if I were to pay the source reductions than I would decrease these amounts (CPP,EI, Tax) from the payables and credit Cash but this is only June 15 when I pay with cheque. I think I do not have to include the source reductions payment than in the journal entry?[/QUOTE]

    ??
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    #8

    Jun 26, 2012, 05:35 AM
    Quote Originally Posted by paraclete View Post
    What are source reductions?
    I think the amounts sent to general receiver.
    If employees start working on May 1st and I pay their wages on May 31st but pay their source reductions of both employees and employers on June 15 than I am assuming that I do not have to include this amount in the journal entry as you pointed early but how do I create a liability for this? Since the CPP, EI and Employees Income Tax were already as payables if I were to pay the source reductions than I would decrease these amounts (CPP,EI, Tax) from the payables and credit Cash but this is only June 15 when I pay with cheque. I think I do not have to include the source reductions payment than in the journal entry?[/QUOTE]

    ?? [/QUOTE]


    =). Sorry to start your day with agony.
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    #9

    Jun 26, 2012, 04:54 PM
    Quote Originally Posted by kristi_12 View Post
    I think the amounts sent to general receiver.
    If employees start working on May 1st and I pay their wages on May 31st but pay their source reductions of both employees and employers on June 15 than I am assuming that I do not have to include this amount in the journal entry as you pointed early but how do I create a liability for this? Since the CPP, EI and Employees Income Tax were already as payables if I were to pay the source reductions than I would decrease these amounts (CPP,EI, Tax) from the payables and credit Cash but this is only June 15 when I pay with cheque. I think I do not have to include the source reductions payment than in the journal entry?
    ?? [/QUOTE]


    =). Sorry to start your day with agony.[/QUOTE]

    I have no idea what you mean. If the telephones transaction attracts some sort of tax because it is an employee benefit then you would have an expense account, perhaps styled benefits tax and you would debit that and credit accounts payable. If the employee is liable for the tax you would reduce the employees salary by deduction and credit accounts payable similarly if the usage charges are to be paid by the employee you would reduce the employees salary by deduction and credit accounts payable. If you had another description and explanation for these source reductions it would make your question easier to understand and answer
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