Director Salary Journal Entry

Directors are active and they are top level management of the company who works and acts on the behalf of Owners of the business. The remuneration paid to directors include salary, fees or any compensation given to them during their job time or works or employment such as use of cars or any property of the company. The Remuneration of Directors is high as their responsibilities are huge.

When the company paid salary, fees or remuneration to a Director, then following Journal Entry is recorded in the book of company’s business as shown below:

Director Salary a/c / Director's Remuneration a/c / Director Fees a/c  XXX

                                                                           Cash a/c / Bank a/c  XXX

                                              (Paid Salary To Director For The Month)

When the salary is not paid by the company to director even though the director performed his duty during the month, then such type of salary is called Accrued Salaries or Salaries Payable as it payable or due from company to its employee. In that case, according to Accrual Basis of Accounting, the following Adjusting Entry is recorded as shown below:

                                         Director Salary a/c  XXX

                                                                        Director Salary Payable a/c  XXX

                                                 (Director Salary Accrued For The Month)

When the company actually paid salary to director for cash or bank, then the above entry is reversed and following entry is recorded:

                                              Director Salary a/c  XXX

                                                                            Cash a/c / Bank a/c  XXX

                                               (Now, Salary Paid To Director For The Month)