Friday, 4 November 2016

Advance Salary Journal Entry

Advance Salary Journal Entry

Advance Salary is an asset (as service is to be received in future).  Advance Salary is debited in the books of account and cash is credited. This has been shown below

Date
Particulars
Dr.
Cr.

Advance Salary
$ xxx


   Cash

$ xxx

Advance Salary Journal Entry Example


In the month of January, An advance Salary of $ 2000 is paid to an employee. This transaction shall be recorded as under. The advance salary is debited being an asset, where cash is credited due to decrease in asset.

Date
Particulars
Dr.
Cr.
Jan,2014
Advance Salary
$ 2,000

Jan,2014
   Cash

$ 2,000

Advance Salary Charged Expense

Advance Salary which was recorded as an asset in the month of January shall be charged as expenses in the month of February, as the services received in the month of February,2015. The entry for recording the expense is shown below.

Date
Particulars
Dr.
Cr.
Feb,2014
Salary
$ 2,000

Feb,2014
   Advance Salary.

$ 2,000

The above scheme of entries can be used to record all kind of advance expenses like prepaid insurance, prepaid rent etc.

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