Payment of bonus to employees

Dear All,

            A private company paid bonus to its empoyees through bank in the FY 2013-14. But the bonus belonged to the FY 2011-12. The Entries in the books were in the following manner,

                          Bonus for Employess A/c Dr.                xxx

                                  To Bank A/c                                          xxx

             "Bonus for Employees" was grouped under Indirect Expenses. Then doesn't it become the expense of Current year? The reason for late payment of Bonus was due to delay by the employees in depositing their cheques. Is it an extra ordinary item? Please explain whether this is a prudent accounting treatment.

Replies (6)

Did co. created a provision for bonus A/c in FY 2011-2012? if yes then this entry

has been correct i.e bonus payable a/c dr To Bank A/c.what Co. did?

Hi

 

Your entry is wrong, since every comany maked liabilty for bonus every year so payment need to be adjusted agast Provison it self.

 

Thanks

If they have created a provision in fy 2011-12, then they could have reversed the provision. But the bonus amount is debited as an expense and reflected in p & l A/c.

Bonus & Leave encashment paid to factory workers or labours is it a direct expense or indirect ?

Bonus is indirect Expenses...

If it is paid to factory workers also ?

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