Paid Telephone Charges Journal Entry

Telephone charges are indirect expenses for a business.

These are not just an entity’s office/fax/toll-free/call center expenses. However, it will also include reimbursements for its employees’ voice/data plan.

Nowadays, entities provide their employees with smartphones to ensure they are current with work-related emails, notifications, and messages. So, telephone charges contribute a decent portion of indirect business expenditures.

Before learning how to record the Paid Telephone Charges Journal entry, we will understand some fundamentals relating to this transaction.

Fundamentals

Now, we have a concrete understanding of the nature of this account balance. So, we can try to resolve all the basic questions, such as the type of Account, applicable accounting rules, and different considerations, before recording the journal entry.

What type of Account are telephone charges?

Telephone charges are like expenses and fall under the Nominal Account category of the Golden Rules of Accounting. Rental expenses are another similar indirect expense. Read more about the rent paid expenses journal entry.

What is the Golden Rule of accounting applicable to Telephone Charges?

Nominal Accounts Golden rule is “Debit all expenses or losses and Credit all income or gains.”

What are the other considerations relating to the telephone expenses journal entry?

We need to identify the other GL accounts affected by this journal entry.

How do I record telephone charges?

Telephone Charges are recorded by debiting the telephone expenses and crediting the Liability. 

Recording the Paid Telephone Charges Journal Entry

We need to identify all the GL accounts of this transaction. Another GL Account that will be part of the second leg of the journal entry is telephone charges payable to GL. This GL is a Liability account and part of a Personal Account.

Per Personal Account, Golden Rules of Accounting, Debit the Receiver, and Credit the Giver. Therefore, the Liability account will be credited to the journal entry. Let’s look at the journal entry.

The subsequent Entry for payment will be

The Telephone expenses Payable GL gets nullified. Therefore, the Paid telephone charges for journal entries will be 

Your Questions and Our Solutions

Are telephone charges debit or Credit?

Telephone charges are business expenses. Therefore, they will be on the debit side of the journal entry because they fall under the Nominal Account.

Is the telephone an asset or expense?

The Monthly Telephone charges are expenses. However, if any costs are incurred as a refundable deposit, it will qualify as an asset. The point that needs attention here is the classification of such deposits. If the refund period is less than 12 months, it can be part of the current asset; otherwise, it’s a non-current asset.

Telephone bill received but not paid, journal entry

Telephone bills are received but not paid, and journal entries will be nothing but the accrual of expenses. It’s common across all industries to record the monthly accrual of telephone expenses. So, the Entry will be debiting the telephone bill with a corresponding Credit to the telephone payable liability GL.

Does the telephone bill fall under debit or credit?

The telephone bill will be debited in the journal entry.

Also Read: How to record the traveling expenses journal entry

Telephone charges come under which Account

Telephone charges are not an essential expenditure directly supporting the entity’s business. However, they do have an indirect effect. As such, they are an indirect expense falling under the non-operating expenses grouping.

Paid telephone expenses by cheque

The entry to record these paid telephone expenses by cheque is only a payment made through the bank. So, the Entry will debit the telephone expenses and credit the bank account.

Summary of Paid Telephone Charges Journal Entry

There are two approaches for recording paid telephone charges in a journal entry. The telephone bill can directly affect the telephone expenses and the bank account. So, the telephone bill is debited, and the bank account is credited. Refer to the third table above for the JE.

The other approach is to accrue the expenses by recording the 

• Telephone expenses and Liability Accounts will be on the debit and credit side of the journal entry (Refer to the First table above for the JE)
• The liability Account and Bank Account will be on the debit side and credit side of the Entry (Refer to the Second table above for the JE)

Therefore, the net Entry will knock off the Liability account, telephone expenses will be on the debit side, and Bank Accounts will be on the credit side.