prepaid salary and outstanding salary

Journal Entry of Outstanding salary and Prepaid Salary In Accounting

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Journal Entry of Outstanding salary and Prepaid Salary In Accounting

for more go to our blog Outstanding expense 

Journal Entry of Salary outstanding expense

Salary paid for the month of Jan Rs 5,000 actual salary Rs 10,000

Journal Entry for the same will be.

Salary A/c   Dr.      10,000

To cash A/c                5,000

To salary payable A/c  5000

Credit liability as Liability ADD

(being salary paid and payable salary)

Now in the month of Feb, the adjustment of salary will be made.

Salary A/c Dr.    10,000

Outstanding salary A/c Dr. 5,000

To cash A/c                           15,000

(being salary paid off last month salary)

Debit liability to deduct liability – from the business.

Prepaid Salary Accounts

Journal Entry of Salay Prepaid expense

Salary paid for the month of Jan Rs 15,000 actual salary Rs 10,000

Journal Entry for the same will be.

Prepaid Salary A/c Dr. 5,000

Salary A/c   Dr      10,000

To cash A/c                15,000

Debit  Asset to ADD Asset + from business

(being salary paid with advance salary)

Now in the month of Feb, the adjustment of salary will be made.

Salary A/c Dr.    10,000

To cash A/c               5000

To Prepaid Salary A/c 5000

(being salary paid and adjustment of last month salary)

Credit Asset to deduct Asset – from business

Outstanding and Prepaid Salary in Profit and loss account.

During the year if outstanding and prepaid salary is to be shown in the profit and loss accounts as we have to know actual profit and loss of the financial year.

If outstanding salary of the Financial year is not paid then it to be added in the salary in the debit side of profit and loss account as it is expense of this year only.

Similarly if salary is prepaid and not adjusted during the year than it will be deducted from the salary in the debit side of Profit and loss side .

Particular

Amount

Particular

Amount

To salary

+      Outstanding salary xxx

–          Prepaid Salary xxx

 

xxxx

 

 

Outstanding and prepaid salary in balance sheet

Outstanding salary is liability therefore it will be shown in the liability  Balance sheet.

Prepaid salary is a liability therefore it will be shown in the Prepaid Balance sheet.

Outstanding salary in the Balance sheet

Liability

Amount

Assets

Amount

Outstanding
Expense

 

 

 

 

Prepaid salary on the Balance sheet

Liability

Amount

Assets

Amount

 

 

Prepaid
Expense

 

 

Key difference Between prepaid salary and Outstanding salary

Prepaid Salary (advance salary )

Outstanding Salary

To add prepaid salary in

The books of accounts we have

To Debit it .

.To Add Outstanding salary

In the books of accounts, we have

To Credit it .

Prepaid salary is Asset by nature.

Outstanding Salary is Liability by nature

Prepaid salary journal entry

Outstanding salary journal entry

Prepaid Salary     Dr   xxx

  To cash A/c                 xxx

(being salary paid in advance)

Salary  A/c Cr.                      xxx

   To outstanding salary A/c      xxx

(being outstanding salary paid)

Adjustment of prepaid salary

Salary A/c Dr.                xxx

   To Prepaid Salary A/c   xxx

(Being adjustment of advance

Salary)

Adjustment of outstanding salary

Outstanding salary A/c Dr    xxx

   To cash A/c                              xxx

(Being outstanding salary paid )

It deducted from Salary in Profit

And loss accounts

IT is added to profit and loss

accounts

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