Journal Entry For Provision For Salary

Salary Provision Definition And Meaning | Salary Provision Adjusting Entry

Provision for Salary is an estimation of salary paid by company to an employee at the end of the accounting period. It is a Current Liability to show on Balance Sheet. The Adjusting Entry to record it is as follows:

                                                      Salary a/c  XXX

 

                                                                       Provision For Salary a/c  XXX

                                       (Provision For Salary is Created For the Month)

At the end of the month, when the company actually paid salary to an employee, then the above Entry is reversed by passing Reversing Entry as shown below:

                                         Provision For Salary a/c  XXX

                                                                               Salary a/c  XXX

                                                        (Provision For Salary is Reversed)

Then, the following salary paid entry is recorded in the Book Or Journal of the company:

                                                     Salary a/c  XXX

                                                                       Cash a/c / Bank a/c  XXX

                                                         (Salary Paid by Cash / Bank)