Hi Sir,
One of my clients would have shown Gratuity under employee CTC. Every month deducting the Gratuity and transferring to Gratuity Trust..
Expenses they are showing as below.
Debit (Staff Salaries)
Debit (Gratuity Employer)
Credit (Gratuity Payable to Trust)
Credit (Salary Payable to Employees)
Is it correct to show under CTC and show like this.. please clarify. Thank you!
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Gratuity under CTC
Replies (1)
Corrected entries:
Debit (Staff Salaries)
Debit (Gratuity Expense/Provision for Gratuity)
Credit (Gratuity Payable to Trust)
Credit (Salaries Payable/Employee Benefits Payable)
Gratuity is a retirement benefit, and the employer's contribution should be debited to Gratuity Expense or Provision for Gratuity.
The amount transferred to the gratuity trust should be credited to Gratuity Payable to Trust.
Salaries payable to employees should be credited to Salaries Payable or Employee Benefits Payable.
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