Reversing provision

This query is : Resolved

ravi (Querist)
Follow

30 August 2013 Dear All,

Please let me know, what will be the entry in the month of August during monthly closing, if we have to reverse provision taken for bonus at the time of year ending i.e. 31st March. Bonus has been paid in the beginning of August month itself.

CA Mehta Ankur N.

CA Mehta Ankur N. (Expert)
Follow

30 August 2013 Provision should be write off in books.

Entry will be.

Provision for bonus A/c Debit

To, Mode of payment(Cash or Bank etc.)

(Being amount of bonus paid)

By this your provision account will become nil & u booked expense also.

ravi

ravi (Querist)
Follow

30 August 2013 Dear Sir,

We have to reverse the provision after making payment.

CA Mehta Ankur N.

CA Mehta Ankur N. (Expert)
Follow

30 August 2013 Mr. Ravi What entry u have passed ?

When making provision ?

ravi

ravi (Querist)
Follow

30 August 2013 At the time of Provision:

Bonus Dr.

Provision for bonus cr.

at the time of paying:

Provision for bonus dr.

to Bank

we have taken excess provision at the time of closing.....now tell me entry for reversing that excess amount.

CA Mehta Ankur N.

CA Mehta Ankur N. (Expert)
Follow

30 August 2013 Oh ok... that will be your income because you have taken same as expense at the time of making provision.

So Entry will be.

Provision for Bonus Dr. with excess amount.

To Excess provision for bonus(New Account under Income head).

So effect will become nil.

No More Expense charged to P & L A/c.

ravi

ravi (Querist)
Follow

30 August 2013 Thank you Ankur Ji........

CA Mehta Ankur N.

CA Mehta Ankur N. (Expert)
Follow

30 August 2013 Most Welcome