03-01-2009, 06:31 AM
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by raja asad</i>
<br />Question salary per month is 1000
salary paid on 2nd day of next month.
accounting period january to december
Reuired show the complete accounting flow of above entries on 31st december?
Asnwer
on 31st of december the following entry is already appear in the books
salaries A/C 11000
cash A/C 11000
Further more on 31st of december we shall have to pass an adjusting entry of 1000 accrued expense.
salaries A/C 1000
salaries payable A/C 1000
MY CONCERN
i would like to know from u guys that what will be the closing and reverse entries on the 1st of next of year if any?
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Hi Asad,
Infact in organizations where accrual concept is being followed, at each month end expenses are accrued, and on the beginning of next month adjustments are made when actual cash payment is made for that expense....
proper scheme of entries will be like this, whether it is last month of your financial year or other
At month end 31.08.2008 (salary for the month of August 2008)
Dr Salary Expense (Expense Account)
Cr Accrued Expenses/Salary payable (Liability Account)
This is the salary for the month of August, therefore the expense should be recognized in August. In general, cash payment of salary for the month of August will be made at the beginning of September 2008....
when actual cash/bank payment will be made to employees, following entry will be passed
Dr Accrued Expense (Liability Account)
Cr Cash/Bank (Asset Account)
So in your question same scheme of entries must be followed
31.12.2008
Dr Salary expense 1,000
Cr Accrued expenses/salary payable 1,000
Salary expense recognized for the month of Dec 2008
02.01.2009
Dr Accrued expenses/salary payable 1,000
Cr Cash/Bank 1,000
Need more!
<br />Question salary per month is 1000
salary paid on 2nd day of next month.
accounting period january to december
Reuired show the complete accounting flow of above entries on 31st december?
Asnwer
on 31st of december the following entry is already appear in the books
salaries A/C 11000
cash A/C 11000
Further more on 31st of december we shall have to pass an adjusting entry of 1000 accrued expense.
salaries A/C 1000
salaries payable A/C 1000
MY CONCERN
i would like to know from u guys that what will be the closing and reverse entries on the 1st of next of year if any?
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Hi Asad,
Infact in organizations where accrual concept is being followed, at each month end expenses are accrued, and on the beginning of next month adjustments are made when actual cash payment is made for that expense....
proper scheme of entries will be like this, whether it is last month of your financial year or other
At month end 31.08.2008 (salary for the month of August 2008)
Dr Salary Expense (Expense Account)
Cr Accrued Expenses/Salary payable (Liability Account)
This is the salary for the month of August, therefore the expense should be recognized in August. In general, cash payment of salary for the month of August will be made at the beginning of September 2008....
when actual cash/bank payment will be made to employees, following entry will be passed
Dr Accrued Expense (Liability Account)
Cr Cash/Bank (Asset Account)
So in your question same scheme of entries must be followed
31.12.2008
Dr Salary expense 1,000
Cr Accrued expenses/salary payable 1,000
Salary expense recognized for the month of Dec 2008
02.01.2009
Dr Accrued expenses/salary payable 1,000
Cr Cash/Bank 1,000
Need more!
