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Sapna Takia

What is paid salary by cheque journal entry?

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1 Answer

  1. Salary is an indirect expense incurred by every organization as consideration for the efforts undertaken by the employees of the organization. It is one of the most recurring transactions because it is paid monthly. It is usually paid by cheque or through netbanking.

    Here, I will explain you the journal entry for salary paid by cheque.

    Journal entry for paid salary by cheque

    I will present the journal entry using both the golden rule and the modern rule of accounting.

    1. According to the “Golden rules” of accounting

    Salary A/c Debit Nominal account Debit all expenses and losses
     To Bank A/c Credit Personal account Credit the giver

    (Being salary paid by cheque)

    2. According to the “Modern rules” of accounting

    Salary A/c Debit Expense Debit the increase in expenses
     To Bank A/c Credit Asset Credit the decrease in asset

    (Being salary paid by cheque)

    Example

    Samsung Inc. paid salary amounting to 250,000 to its employees by cheque for the month of March 20xx on 31/03/20xx.

    Journal entry in the books of Samsung Inc. on 31/03/20xx will be as follows-

    Salary A/c Debit 250,000 Debit the increase in expenses
     To Bank A/c Credit  250,000 Credit the decrease in asset

    (Being salary paid by cheque for the month of March 20xx)

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