Reversing Entries
On the first working day after the end of the fiscal period, reversing entries must be made for al Accrued Expenses & Accrued Revenue adjustments so that they are not recorded twice.
Example
A six month loan was purchased October 1, 2008 and became due on March 31, 2009. Assume $225 worth of interest was incurred at the end of the fiscal period (December 31, 2008). This is interest that is owed but will not be paid until the loan becomes due on March 31, 2009
| Debit | Credit |
|---|---|
| 1. Dec 31 $225 | 2. Dec 31 $225 |
| 4. Mar 31 $450 | 3. Jan 1 $225 |
- Adjusting Entry
- Closing Entry (close expenses)
- Reversing entry (bring it back)
- Payment in full.