salary payable

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kriti tuteja (Querist)
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25 July 2011 hello...
i have a query.. i am doing audit of a partnership firm..
here i observed that salary payable is showing debit balance...
so.. suggest me what to do.. to correct this...???
hoping for rply...
plzz help me...

CA Sachin D Jain

CA Sachin D Jain (Expert)
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26 July 2011 Dear Kirti,

Debit balance in salary account may be due to following reasons:

1. Payment entry is made by salary expenses not booked.

2. Advances given to employees and debited to salary payable account.

3. Payment made is more than what is booked as expenses and liability.

4. Full and Final settlement payments made, for e.g., leave encashment, gratuity etc. debited to salary payable account instead of expenses account.

There may be other reasons also.

First of all, you will have to find out the reason for such a debit balance, for which you will be required to scrutinise the account. The reason of having debit balance may be due one or more of the above. If reason of debit balance is found out, pass necessary rectification enteries.

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kriti tuteja

kriti tuteja (Querist)
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28 July 2011 thanxx a ton!!!

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