Gratuity accounting entry

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Dear Sir/Madam

My company has gratuity fund in lic of india, every year by December month we are renewing our fund including insurance premium during the course of employees resignation lic will settle the gratuity amount to company in return company will pay the same amounts to the left employees.

Kindly suggest me with accounting entries from gratuity fund paid to LIC to settlement to employees (including gratuity expenses in P&L)

Kindly help me.

Thanks

Ananda

 

 

 

 

Replies (1)

In any company Gratuity is considered as a Liability & it should be calculated on every month basis becuase it is not sure the employees will stay with the company or not. So every month end the provision for gratuity should be calculated for all the employees.

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