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Outstanding Salary
Example- Company A Ltd pays their employees a monthly salary of 25,000. The company has a policy that it pays the previous month salary to its employees on 10th of next month. Salary for March is due and is duly to be paid by the 10th of April as per the company policy. Journalise the following transaction for salary due and paid in the books of ABC and Co.
In the Books of ABC and Co.
(Being salary due for March)
(Being salary paid)
Accounting Treatment
Outstanding salary is added to the salary and shown on the debit side of profit and loss account. It is further shown under the head current liabilities in the balance sheet. Outstanding salary is also known as Salary due (or) Salary payable.
Modern Accounting Approach
We will record the same transaction by following the modern rules of accounting
In the Books of ABC and Co.
(Being salary due for March)
(Being salary paid)