Gratuity payable

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This discussion addresses the accounting treatment for gratuity payable. The user created a journal entry for gratuity payable on 31.3.19. They are now seeking guidance on how to handle the existing payable balance when creating a new provision for FY 19-20, specifically whether to add it to the current year's provision or reverse the old entry. The conversation touches on the complexities of reversal entries and potential net differences.

lakshmi

lakshmi (Querist)
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06 January 2020 Dear Team,

We have passed journal entry for Gratuity payable dated 31.3.19 as follows:
Gratuity A/c Dr
To Gratuity payable A/c

If there was no gratuity paid for the payable amount entered earlier and the new provision has to be created for the FY 19-20.
In this scenario, what about the old payable balance entered on 31.3.19.

Will that be added to current year provision? Or is there a cancellation entry for the old amount?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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06 January 2020 Reverse old provision........

Message likes : 1 times

lakshmi

lakshmi (Querist)
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06 January 2020 Thank you so much Sir.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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06 January 2020 Welcome................

lakshmi

lakshmi (Querist)
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08 January 2020 When I am reversing the entry for Gratuity payable, the net Gratuity amount is coming as a difference between old amount and new entry .

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