Accounting method on tds deduction from salaries

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This query is : Resolved

mohan (Querist)

30 December 2015 Dear Sir,
On payment of Salaries I am making the following entry:
Salaries Dr. 10000 (Gross)
To Cash Cr. 10000
and
Cash Dr.1000
To TDS Cr.1000
i.e. I am showing TDS as receipt on making Gross Salaries a/c. Whenever I am paying TDS I am making the Entry as:
TDS Dr. 1000
To Cash Cr. 1000
Someone asked me to make entry as:
Salaries Dr. 9000
to Cash Cr.9000
and on payment
TDS Dr.1000
To Cash 1000

Please suggest me which one is correct. What are accounting methods.
-Mohan

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

30 December 2015 You may follow your accounting method. However you can make the entries by inserting "Salary Payable A/c.
You may do this in the manner - Salary A/c (Dr) 10000 To TDS A/c1000 & To Salary Payable A/c 9000.
At the time of payment Dr Salary payable a/c and TDS A/c by Cr Cash/Bank A/c .

Message likes : 1 times

mohan

mohan (Querist)

31 December 2015 Thank you very much for your detailed and quick reply dear Paras sir,

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