Journal Entry and Ledger Posting for Salary incurred but not yet paid

Salaries are the amount of expense which is paid to the employees of a Business Organization against their service provided. 

Generally Salaries are fixed in nature for one Accounting Year.

Salaries are paid in Monthly/Quarterly/Half Yearly/Yearly basis.

In maximum cases Salaries are paid in Monthly basis.

Now let's discuss about the Journal Entry and Ledger posting procedure when Salaries are incurred but not yet paid.

When Salaries incurred but not yet paid.

Salaries Account shows Debit effect and,

Salaries Payable Account shows Credit effect.

Journal Entry

Journal Entry for Outstanding Salary/Salary Payable

Ledger Posting

In Salaries Account.

Outstanding Salaries - Posting in Salaries Ledger Account.

In Salaries Payable Account.

Outstanding Salaries - Posting in Salaries Payable Ledger Account.

Example :

In the Books of M/s.Trimurthy Traders, Salary incurred for the month of March'2022 for ₹10000/- but paid after dt.31/03/2022.

Pass necessary Journal Entry and Post them into their respective Ledger Accounts for the above transaction.

In this example 

Debit Ledger is :

  • Salaries Account

Credit Ledger is :

  • Salaries Payable Account

Journal Entry

Journal Entry for Salary incurred but not yet paid.

Ledger Posting

In Salaries Account

Outstanding Salaries - Posting in Salaries Ledger Account.

In Salaries Payable Account

Outstanding Salaries - Posting in Salaries Payable Ledger Account.

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Location: Cuttack, Odisha, India

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