Journal Entry for Accrued Revenue

In this article, we will try and understand the concept of accrued revenue, journal entries, and accounting transactions.

Examples of Accrued Revenue Journal Entry

Example #1

XYZ Company is in the contracting business and has operations in the middle east and east Africa. The company entered into a contract with JR Associates to build a hotel in Arab. The agreement is 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. The bank helped facilitate a transaction with them. It was agreed between both parties that the client would 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 into the books of accounts.

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 on 3rd January 2011. ABC Limited is preparing the books of accounts for the year ending 31st December 2010; what accrued entry should allow the business to 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.

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

Example #4

Teleperformance Company, a French-based company, is in the consulting business and has operations in the Asian and the Asia Pacific Market. The company entered into a contract with Intelenet Global Services to operate a call center in India. The agreement is 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?

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 ExpenditureAccrued Expense Journal Entry ExamplesDeferred Revenue Expenditure ExamplesAccrued Expenses in AccountingJournal Voucher