Adjustment entry
This query is : Resolved
13 October 2012
Trail balance showing Salary A/c 30000,outstanding salary 5000 and additional information is given advance salary is 7000.
what would be the adjustment entry for preparing adjusted trail balance?
what would be the adjustment entry for preparing adjusted trail balance?
13 October 2012
Is you asking how much salary amount debit to P&L a/c for such year? Is it correct the answer is as follows.
Salary in P&L A/c = Salary paid(i.e trail balance showing amount) + Salary payable(i.e Out standing amount) - Advance salary paid.
Thus Salary in P&L A/c = 30000+5000-7000 = 28000.
Why such adjustments required. according to the accrual basis of accounting system these adjustments required because to satisfy the accrual basis of accounting concept. According to this concept income/expenditure should be credit/debit to the P&L a/c(i.e recognaise) in the year of such actual liability arises.
Thus for the year salaries liability arised Rs.5000 but not paid so should be debited to P&L in such year and show as liability. As well as salaries relating to future years of Rs.7000 paid during the year but actually salaries liability doesn't arised in such year. So should be deduct from P&L a/c and show as asset.
OM SAI SRI SAI JAI JAI SAI
Salary in P&L A/c = Salary paid(i.e trail balance showing amount) + Salary payable(i.e Out standing amount) - Advance salary paid.
Thus Salary in P&L A/c = 30000+5000-7000 = 28000.
Why such adjustments required. according to the accrual basis of accounting system these adjustments required because to satisfy the accrual basis of accounting concept. According to this concept income/expenditure should be credit/debit to the P&L a/c(i.e recognaise) in the year of such actual liability arises.
Thus for the year salaries liability arised Rs.5000 but not paid so should be debited to P&L in such year and show as liability. As well as salaries relating to future years of Rs.7000 paid during the year but actually salaries liability doesn't arised in such year. So should be deduct from P&L a/c and show as asset.
OM SAI SRI SAI JAI JAI SAI
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