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Pls experts help me.

A/c entries 679 views 4 replies

when we make a provision for salary due we pass journal entry like this.... SALARY A/C DR 

                                                                                                                                           TO SALARY PAYABLE A/C  CR as on 31 march

now my question is that how to write off salary if i dont want to pay to my employee due to any dispute.??????how will i pass the journal entry for write of salary?

Replies (4)

I think this will also require concern with law related aspects of LABOUR LAWS.  And accordingly you need to adjust your entry. I am not knowing exactly how to resolve this.

 

I think, There is no problem with journal entry which you have passed. The effects of that entry as expenses incresed as well as liability. Now you don't want to pay the salary as provision, so I think you should reverse the entry  on 1st April. show the salary as INCOME which you have shown as expenses on 31st March.

If you have disputes with your employees and you dont want to pay the salary payable as shown in the balance sheet .

It is the Court who will resolve the dispute. Upto the time period till the dispute case is pending with the court You

should show the amount of Salary Payable as "Contigenty Liability" at the foot of the Balance Sheet .

When You will win the case the amount of salary payable will be paid as

Salary Payable ..........Dr              XXXXX

                         To Salary                            XXXXX

If you lost the case the entry will be

Salary Payable ..........Dr              XXXXX

                         To Bank/Cash                    XXXXX

         

 

 

But Contigent liabilities are not taken into calculation of total liabilities. So doesn't it will create a shortage on liabilities side. As earlier we have passed the entry

Salary A/c.......... Dr

     To Salary Payable A/c

And if we consider salary payable as contigent liability.So doesn't it will create a shortage on liabilities side???


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