Kumar Gaurav (Going...to be C.A soon...) (1624 Points)
09 July 2010Dear All
If a company having salary cycle period from 26th of 25th of every month..............say 26th April to 25th May, and booked
the salary amount on 31st May...........then makes payment entry on 7th of the following month...................is it right to show on 31st May ??? ie: because 5-6 days salary is less booked in the month of May itself
Kindly advise!
karthi sabapathi
(student)
(173 Points)
Replied 20 July 2010
here we have to consider the no. of days taken for salary calculation for a month. For the month of May 26 days and 4 days from March month, totally 30 days..
There for there is no wrong to make a entry on 31st day of the month.
CA. Nishant Jain
(Audit Executive)
(411 Points)
Replied 01 August 2010
Dear Kumar Gaurav,
Expenses relating to a particular financial year should be booked in that financial year itself.
With regards to your querry, the problem will arise only in the last month of the fnancial year. There also you have to pass an entry of salary already due i.e., from 26th of Feb to 25 th of March in the month of March and you also have to pass a journal entry with regards to salary for the rest of the period till 31st March (for 6 days). Since as per your querry salary is paid on 7th of next month. the salary for the period 26th feb to 25th march will be paid on 7th of April and salary of 6 days already booked in the month of march will be paid along with the salary of 25 days of April, on 7th of May.
In normal course of practice, no entry of 5 or 6 remaining days salary (as per your querry) is passed in books of accounts on month to month basis except at year end. But if you wish to do so, you can follow the above said procedure.
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