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| *Ostroff, Fair and Company>>>Financial Services |
Query on Tally? |
This is for Tally professionals: In a balance sheet during the closing of a/c, you enter some vouchers as payable expenses. On start of new financial year, these payable expenses are also carried forward. How do we adjust this in the new financial year, what should be the entry for this. Like suppose there is an entry as salary payable for the month of april to office staff, now how do we adjust this during the current year. VERY SIMPLE. WHEN YOU PAY THE SALARY FOR THE MONTH OF MARCH FOR WHICH YOU HAVE MADE THE PROVISION IN YOUR MARCH, 07 BALANCE SHEET, KINDLY DEBIT SALARY PAYABLE ACCOUNT INSTEAD OF SALARY ACCOUNT. AUTOMATICALLY IT WILL BECOME ZERO. TRY IT. IF NOT KINDLY CONTECT ME AGAIN. Your question is somewhat convoluted, but I'll try to explain using salaries as an example. Suppose that salaries are paid every two weeks. The last payday was on April 25. By April 30 five days of salaries were earned by employees, but they will only be paid in May. So to have the financial statements at the end of April reflect the proper amount of salary expense, you have to record the 5 days of salary expense incurred and not paid. You do that by debiting salary expense and crediting salaries payable for 5 days' salaries. Now the April salary expense reflects the full amount earned by employees in April, although part of it has not yet been paid. On May 9, when the next two weeks of salaries are paid, employees will get checks or cash in the proper amount for two weeks' work. But only 9 days of this amount was earned in May, so May expense should reflect only 9 days of salary expense, although you are paying cash for 14 days. The entry is to debit salary expense for 9 days in May, debit the salaries payable account recorded at the end of April, and credit cash for the full amount paid. You have now discharged the liability incurred at the end of April. We pass payable entries only in case of expenses related to the year i.e. salary for the month of march paid in april but it is exp related to last year. in the same case debit your exp. a/c and credit exp. payable a/c ( treat as a current liability) in last year and when we paid this amount in next year > debit such exp payable a/c instead of exp. a/c i.e. in april you have to pass following entry : salary payable a/c (Dr.) Cash/Bank (Cr). |
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