Dear reader, are you looking to know how to pass a journal entry for outstanding salary? Then you came to the right article. In this article. You will get to know about how to pass the journal entry for outstanding salary. This article is written after referring 10 blogs on this topic.
Before passing the journal entry, you should know a few things: Salary is an expense to the Organization/Business. Outstanding expenses is nothing but expenses which are related to the same accounting period but paid in the future.
JOURNAL ENTRY FOR OUTSTANDING SALARY IS
Salary Account Debit
Outstanding Expense Account Credit.
In simple words, outstanding salary means unpaid salary. It means salary is not paid on time; it becomes outstanding. Outstanding expenses are shown on the liability side of the Balance Sheet Because outstanding expenses are liabilities.
OUTSTANDING SALARY JOURNAL ENTRY EXAMPLE
Salary needs to be paid to XYZ employee for rupees 50,000 but till date it’s not paid.
We need to pass the following General Journal entry for this transaction.
Salary account debit for 50,000.
Outstanding salary account credit for 50,000.
(Being salary not paid on due date to xyz)
In this case, salary is an expense. So it’s a nominal account. We should follow nominal account rule. Outstanding salary is a liability.
OUTSTANDING SALARY PAID JOURNAL ENTRY EXAMPLE
In outstanding expense account It’s showing 50,000 credit balance. This amount related to Salary payable to Mr. XYZ. Now organisation/business is decided to pay rupees 50,000 to XYZ. We need to pass the following journal entry.
Outstanding expense account Debit for Rs 50000/-
Cash or bank account Credit Rs 50000/-
(Being outstanding expense paid to Mr.XYZ)
Dear reader in this article you get to know about Journal Entry for Salary Outstanding. Hope you understood the things better. If you have any query regarding this article kindly comment below.