Salaries Expense & Accrued Salaries T Account

Salaries or Accrued Salaries T Account or Ledger Account is prepared to record all Business Transactions related to Salaries of all of the employees either the company paid Salaries Expense to employees or when there is a case of Accrued Salaries / Salaries Payable. These are the Control Accounts for Salaries.

You Can Also Study, “T Account Debit Credit”

There are two cases relating to Salaries Paid To Employees

(i) When Salaries Paid For Cash / Bank

For Example, XYZ Company paid Salaries Rs. 500000 to employees during the month, then the Journal Entry is as follows:

                                               Salaries Expense a/c   500000

                                                                               Cash a/c / Bank   500000

(Paid Salaries For Cash or Bank)

The above is recorded in the Salaries Expense T Account is shown below:

                                                     Salaries Expense T Account

                                                                For the Period

                        Rs.                                                                                    Rs.

  Cash           500000

(ii) When Salaries Accrued or Not Paid During The Month

But, if the company does not pay during the month for the services rendered by employees for the selected tasks, then according to Accrual Basis of Accounting and Matching Concept Gaap, there is need to adjust the amount of salaries with the revenues generated during the month by employees, so Salaries Adjusting Entry is passed:

                      Salaries Expense a/c   500000

                                                         Accrued Salaries / Salaries Payable a/c   500000

(Salaries Outstanding During The Month)

The above adjusting entry is recorded in Salaries Expense and Accrued Salaries T Account as shown below:

                                                            Salaries Expense T Account

                                                                      For the Period

                                 Rs.                                                                                    Rs.

Accrued Salaries   500000

 

                                                           Accrued Salaries T Account

  

                                                                     For the Period

                                Rs.                                                                                    Rs.

                                                                                            Salaries              500000

Balance c/d           500000

The balance figure of Accrued Salaries is now finalized and adjusted and will go the balance sheet on Liabilities & Equity Side under the Head of Current Liabilities.

On the next month, if the company paid the salaries to employees, then Accrued Salaries T Account is Debited in order to close the Liability Account.