Journal entry for issuing check

Overview

In business, the company may issue the check for various purchases from suppliers as well as for some expenses during the accounting period. Likewise, the company needs to make the journal entry for issuing the check whether it is issued for buying assets, paying for expenses, or settling the previous debt.

Journal entry for issuing check will reduce the balance in the bank account of the company. Likewise, the total assets on the balance sheet will decrease as a result of this one side of the entry. However, as the check may be issued for various reasons, the journal entry as a whole may impact the balance sheet as well as the income statement.

For example, if the company issues the check for settling the previous credit purchase, its journal entry will decrease both liabilities and assets at the same time. In another case, if the company issues the check for buying the office supplies, one asset (office supplies) will increase while another asset (bank account) will decrease.

On the other hand, if the company issues the check for paying expenses, the journal entry for issuing check will result in the increase of total expenses in the income statement and the decrease of the total assets on the balance sheet.

Journal entry for issuing check

The company may issue the check for various reasons including settling the previous credit purchase, purchasing the assets, or paying the expenses. Likewise, the company can make the journal entry for issuing check by debiting the accounts payable, asset, or expense account and crediting the bank account.

Account	Debit	Credit
Accounts payable/asset/expense	$$$
Bank		$$$

In this journal entry, the credit of the bank account will reduce the total assets on the balance sheet. Meanwhile, the debit side of this journal entry may impact the balance sheet or the incomes statement depending on whether the debit is for assets, liabilities, or expenses.

Issuing check example

For example, on September 30, the company ABC issues a $1,000 check to one of its suppliers in order to settle the debt that has come from a $1,000 credit purchase that it made on September 1.

In this case, the company ABC can make the journal entry for issuing the check above by debiting $1,000 into the accounts payable and crediting the same amount to the bank account.

Account	Debit	Credit
Accounts payable	1,000
Bank		1,000

In this journal entry, both total assets and total liabilities on the balance sheet decrease by $1,000 as of September 30.

Example 2

For another example, on August 31, the company ABC issues a $500 check for the maintenance expense that occurs in early August.

In this case, instead of debiting the accounts payable as in the example above, the company ABC needs to debit the $500 into the maintenance expense account together with the crediting of the same amount into the bank account.

Account	Debit	Credit
Maintenance expense	500
Bank		500

This journal entry affects both the balance sheet and income statement as the total expenses increases by $500 while total assets decrease by the same amount on August 31.