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 |
|
|
|
Prepaid salary on the Balance sheet
Liability | Amount | Assets | Amount |
|
| Prepaid |
|
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 |
