TAMAL KHAN (Articled trainee) (51 Points)
14 September 2012If a Company suffers losses for nonreceipt of some order due to the fault of an employee, and later it wants to deduct some amount as penalty from the salary of that employee, what entry should the Co. pass at the time of deducting the same??
Bhaskar Unnikrishnan CPA CMA
(Accounts / Administration)
(414 Points)
Replied 15 September 2012
Debit Salary Debit Penalty Credit Salary Payable
When Paid:
Debit Payable Credit Cash
Praveen Kumar Agarwal
(Accountant)
(180 Points)
Replied 15 September 2012
salary a/c....dr. penalty a/c.... dr. To Employee's a/c
Arif Ali
(Apt Co Advisory)
(1230 Points)
Replied 17 September 2012
When penalty is paid:
Penalty A/c ... Dr
To cash/bank
and when penalty is charged from employee as deduction:
Employee' salary payable a/c.... Dr.
To Penalty A/c
Praveen Kumar Agarwal
(Accountant)
(180 Points)
Replied 20 September 2012
prit
(accountant)
(26 Points)
Replied 14 August 2013
i want to know about deduction in salary a/c
i m paying 23500pm salary to one of my staff as per her monthly salry come around rs. 282000/- for that i want to know which deduction is applicable to her & at what %...
kindly reply me in details asap.
Leena
(Faculty)
(25 Points)
Replied 17 August 2013
Dear Prit
You should deduct TDS @ 10% on the income above Rs 2lakh.
Also deduct professional tax @ Rs 200 pm.
Shivani
(Learner)
(1881 Points)
Replied 11 September 2013
Agree with Praveen the company has not suffered any loss as such.
But it is penalising the employee at fault so deducting some amount from his or her salary.
In my view entries should be
Salary 1000
To Penalty 1000 (assume)
To Salary Payable 9000
Salary Payable 9000
To Bank 9000
My question is What is this penalty of Rs. 1000 for the company.
Unless other deductions like EPF, ESI or TDS it is not the Current Liability of the company which it needs to deposit with the suitable department within a particular time frame.
It is not an expense for the company either as it has not suffered any loss as such.
Under what head shall we put it while passing its entry in Tally?
Thanks
Shivani
Kolade Oloro
(2 Points)
Replied 24 April 2017
You need to first establish the accounting method your organization adopted. But i trust is accural method of accounting. kindly follow the postings bellow. The ugly truth is that the company made money from the staff, and usually classified as income(Fine and Penalty). See it this way, Assumed that you paid the employee full salary and ask him/her to pay for the fine without you deducting from salary. That it the exact and true senario.
| First Step: Accounting Entry | ||||||||
| Salary Account | ||||||||
| Date | Descriptttion | Amount | Date | Descriptttion | Amount | |||
| Dr | Cr | |||||||
| xxxx | Salary | 50,000 | Bal c/d | 50000 | ||||
| Total | 50,000 | 50,000 | ||||||
| Bal b/d | 50000 | |||||||
|
|
||||||||
| Salary Payable Account | ||||||||
| Date | Descriptttion | Amount | Date | Descriptttion | Amount | |||
| Dr | Cr | |||||||
| xxxx | Penalty/Fine | 5,000.00 | xxxx | Salary | 50,000 | |||
| xxxx | Salary Paid | 45,000.00 | ||||||
| Total | 50,000.00 | 50,000.00 | ||||||
|
|
||||||||
| Second Step: Accounting Entry | ||||||||
| Penalty/Fines Account | ||||||||
| Date | Descriptttion | Amount | Date | Descriptttion | Amount | |||
| Dr | Cr | |||||||
|
5,000.00 | xxxx | Penalty/Fine | 5,000.00 | ||||
| Total | 5,000.00 | 5,000.00 | ||||||
| bal b/d | 5,000.00 | |||||||
| Bank/Cash Account | ||||||||
| Date | Descriptttion | Amount | Date | Descriptttion | Amount | |||
| Dr | Cr | |||||||
| Bal c/d | 45,000.00 | xxxxx | Salary Paid | 45,000.00 | ||||
| Total | 45,000.00 | 45,000.00 | ||||||
| Bal b/d | 45,000.00 | |||||||
Kanchan Nagdev Nagdev
(Accounts Assistant)
(22 Points)
Replied 30 January 2020
Kumar Sushank
(General Manager - Finance)
(1040 Points)
Replied 30 January 2020
In this case, Penalty will be treated as under Indirect Incomes of company.
Bharath
(Accountent)
(23 Points)
Replied 20 February 2020
Dear sir... Under which Accounting Head penalty Account will Come...?
Kumar Sushank
(General Manager - Finance)
(1040 Points)
Replied 20 February 2020
It will be under Indirect Incomes (Accounting Head).
Rama chary Rachakonda
(Master in Accounts & Lawyer email ID:ramachary64@gmail.com voice no:9989324294)
(5148 Points)
Replied 23 February 2020
penalty charges account comes udner General expenes a/c head
Kumar Sushank
(General Manager - Finance)
(1040 Points)
Replied 24 February 2020
@ Mr. Rama Chary: In given case, company is not paying that amount, only charging that amount to his employee. It will be only addition for a company. So, in company books it would be other income.
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