Accrued Revenue Journal Entries

Journal Entry for Accrued Revenue

Accrued revenue journal entries are made by using the adjusting entries at the end of an accounting period to record sales transactions that occurred during that accounting period but were not yet billed. On the balance sheet, it is classified as current assets, whereas on the income statement, it is classified as revenue.

In this article, we will try and understand the concept of accrued revenue and also the journal entries and the accounting transactions which are related to it.

Examples of Accrued Revenue Journal Entry

Example #1

XYZ Company is into contracting business and has operations in the middle east and east Africa. The company enters into a contract with JR Associates to build a hotel in Arab. The agreement is such that the JR Associates will pay $50,000 each to XYZ after each milestone. What is the journal entry for this if the total contract value is $100,000.

The first Journal entry will be –

After the second milestone, two entries will be recorded one reversal of the initial accrual and another for billing the client.

Example #2

On 31 December 2019, Jeffery, an Investment banking firm operating in the United States of America, rendered services worth $500 to their client, which is in the BPO business, and the bank helped in facilitating a transaction with them. It was agreed between both the parties that the client will pay for the investment banks’ service after Jan 2019, and the transaction was not recorded in the books of accounts. Hence, in this case, the following journal entry needs to be passed in the books of accounts

The first Journal entry will be –

Example #3

ABC limited receives an interest incomeInterest IncomeInterest Income is the amount of revenue generated by interest-yielding investments like certificates of deposit, savings accounts, or other investments & it is reported in the Company’s income statement. read more of $1,000 on a bank deposit, which they have deposited in the Abu Dhabi National Bank for December 2010 and n 3^rd January 2011. ABC Limited is preparing the books of accounts for the year ending 31^st December 2010, what accrued entry should the business pass.

The business should record the journal entry in the year itself because it is about the accounting year ending 31 December 2010. In the books of accounts, the following entry will be passed.

The first Journal entry will be –

And on the 3^rd January when the interest is received following entry will be passed in the books of accounts

Example #4

Teleperformance Company, which is a French-based company, is into the consulting business and has operations in the Asian and the Asia Pacific Market. The company enters into a contract with Intelenet Global Services to operate a call center in India. The agreement is such that the company will pay $100,000 each to Teleperformance after each milestone. What is the journal entry for this if the total contract value is $200,000.

The first Journal entry will be –

After the second milestone, two entries will be recorded one reversal of the initial accrual and another for billing the client

Recommended Articles

This article has been a guide to Journal Entries for Accrued Revenue. Here we understand the concept of accrued revenue with the help of adjusting journal entries examples and accounting transactions. You can learn more about accounting from the following articles –

• Examples of Revenue Expenditure
• Accrued Expense Journal Entry Examples
• Deferred Revenue Expenditure Examples
• Accrued Expenses in Accounting
• Journal Voucher