Frequently Asked Questions - LexisNexis

In this example, the bank balance on the Trial Balance was reduced but the balance on the General Bank Journal
was not. The Trial Balance no longer matches the General Bank Journal.
The correct way to handle this transaction is to issue a General Check and allocate the check to the Mortgage
Payable and Mortgage Interest accounts. Account Debit Credit
Mortgage Payable $850.00
Mortgage Interest $150.00
General Bank $1000.00
Which account should I use when I record photocopies for a client — 5520 Photocopy Expense or 5521
Photocopy Recovery?
The answer to this question is "either one". Both accounts are expense accounts and reduce the firm’s net profit.
The difference lies in how you want to see the expense information on your Income Statement.
Assume that you have already purchased photocopy paper and toner with a check for $90. The check was entered
and posted to 5520 — Photocopy Expense.
Scenario 1: Using account 5520 — Photocopy Expense
When you make an expense recovery entry for $3.00 to 5520 — Photocopy Expense, PCLaw debits either 1210 —
Client Disbursement Recoverable (Accrual and Modified Cash methods of accounting) or 5010 — Client
Disbursement Expense (Cash method of accounting). It credits the account that you specify, in this case, 5520 —
Photocopy Expense. Your Income Statement reflects part of the transaction like this:
Photocopy Expense consists of a debit of $90.00 from the initial purchase of photocopy supplies and a credit of
$3.00 from the expense recovery entry.
Expenses
5520 Photocopy Expense 87.00
5521 Photocopy Recovery 0.00