The reason for making a JE was because the original expense recorded to wrong general ledger account. So the JE was just to credit the expense from wrong general ledger account and debit to correct account. When the original expenses recorded ( to the wrong GL account), it was debit to accounts payable. However, the expense was not supposed to pay by that time. We received sub-contractor's invoice every month. So they credit the expense that was paid this month on next submitted invoice. So the GL looked like :
1. when the original expense recorded:
Debit Credit
Expense $6,000
AP $6,000
2. JE made to correct the general ledger account:
Debit Credit
Expense $6,000
Expense $6,000
3. Credit the expense to subcontractor submitted monthly invoice:
Debit Credit
Expense $6,000
AP $6,000
As you can see, the expense was recognized in 2013 but never hit accounts payable. In order to make this payment , they reversed out the step 2 and recorded step 3. However, it caused the change of accounts payable for 2013. Year 2013 is closed and financial statement is done. So how to make a transaction by not affecting 2013 accounts payable and the payment can be paid on 2014. Thanks again for all your professional advice!!!
1. when the original expense recorded:
Debit Credit
Expense $6,000
AP $6,000
2. JE made to correct the general ledger account:
Debit Credit
Expense $6,000
Expense $6,000
3. Credit the expense to subcontractor submitted monthly invoice:
Debit Credit
Expense $6,000
AP $6,000
As you can see, the expense was recognized in 2013 but never hit accounts payable. In order to make this payment , they reversed out the step 2 and recorded step 3. However, it caused the change of accounts payable for 2013. Year 2013 is closed and financial statement is done. So how to make a transaction by not affecting 2013 accounts payable and the payment can be paid on 2014. Thanks again for all your professional advice!!!
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