Hi Respected Members,
I worked in a firm where they deduct late arrivals from salary (1 day salary deduction on 3 late arrivals during a month which increases every 3 more late arrivals). Further, sometimes they also adjust short leaves hours from overtime hours. Please educate me on following:
1-What will be the general entry for late arrival deduction ?
2-What will be the short leave adjustment journal entry ?
3-What is the nature of this deduction account and where it will be goes in P&L or Balance Sheet ?
Thanks in Advance.
- The general entry for the deduction of salary for late arrivals would be:
Debit: Wages/Salaries Expense
Credit: Cash/Bank
- The journal entry for adjusting short leave hours from overtime hours would be:
Debit: Overtime Wages Expense
Credit: Wages/Salaries Payable
- The nature of the deduction account would depend on the accounting policy of the firm. However, in most cases, the account is classified as a Contra-Expense account. This is because it is an account that reduces the Wages/Salaries Expense account.
The account would typically be shown as a deduction from gross salary and reflected as a negative value. In terms of the financial statements, the account would be shown in the income statement under the heading 'Employee Compensation and Benefits' as a reduction from the total amount paid as salaries.
CAclubindia
