salary advances

927 views 3 replies

ravi

senior accountant

507 Points Joined December 2010

Salary Advances

my dear members my questions are:

What is the Ideal amount that can be given to employees as salary advances (1months or 2months or more can be given?)

what is the journal entry if goods (suppose in readymade shop employees take shirts and pants) taken by employees for their personal use how should I account. should i account them similar to proprietor taking goods for his personal use

because this reduces my stock as well. How should I account pls suggest me the whole process of entries

As per my knowledge if cash is given as Salary advance to employees we will post the below entries

Salary Advance a/c

To Bank A/c

Next is when salaries are paid it is

Salaries a/c

To Salary Advance

To Salary payable a/c

Pls suggest me for the goods taken by employees instead of cash.

Thanks and regards,

Ravi

Replies (3)

Dhawal Mohnot

Practicing

449 Points Joined October 2009

for goods taken. Debit Salary advance credit inventory.

@ CA. $ahar$h @

Student

338 Points Joined September 2009

hi ravi,

first question

Yar as such there is no mention anywhere that how much advance should be given it depends on the policy of the company.but what ever you do have consistency as ITO can raise irrelevant queries on the same.furhter as on employee benefit or its interpretation no where mention about months.

Second question

Dekho yar if its the policy of the company to give pants and shirts then the entry should be

Staffwelfare a/c Dr

To Purchase a/c

If its not the poilicy and Staff is taking it as per their will then the entry will be

Abnormal loss a/c Dr.

To Purchase a/c

third question

couldnt understood please clear your doubt about it.

Jyoti Goyal

Manager

36 Points Joined January 2011

Dear Ravi

Salary advance is all upon over company policy. It can not be define from any rule. Income tax is levied only your earned income for the year not on advance.

If an employee take some goods from company then that will be treated as sales for that co. and its depends on company to recover money from employee or not. So if any employee taken some goods from company then make Invoive for that goods and treat as sales and if that goods given as welfare then transfer that goods from Sales to Welfare account. There are no need to accounted with purchase or abnormal loss.