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GRATUITY PAID

Amit (Accounts ) (526 Points)

15 April 2021

We Have Paid gratuity of 50000 thousand to our employee in FY 2020-21 but no provision of gratuity was made in last FY i.e 19-20.

What is journal entry of above mention transaction.

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7 Replies

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 15 April 2021

While making the first provision:

Gratuity A/c Dr.
To Provision for Gratuity A/c

b. While making payment to the employee Provision for

Gratuity A/c Dr.
To Bank A/c

CMA Poornima Madhava (CMA) (13097 Points)
Replied 15 April 2021

1) For provision/liability:

Gratuity Dr

To Provision for Gratuity/Gratuity Payable A/c

2) For payment:

Provision for Gratuity/Gratuity Payable A/c Dr

To Bank A/c

Amit (Accounts ) (526 Points)
Replied 15 April 2021

What is head of Gratuity Ac

Amit (Accounts ) (526 Points)
Replied 15 April 2021

After passing above entry gratuity fund showing minus balance in liabilities side of balance sheet.

CMA Poornima Madhava (CMA) (13097 Points)
Replied 15 April 2021

You didn't mention about the fund a/c earlier. If you maintain gratuity fund a/c, then you would have paid premium to the insurance company or trust etc right?