098 Bonuses-Owners

Adjustments

 

Synopsis

Account 098, Bonuses-Owners, is established to record the amount of Bonuses paid or payable to Owners of the dealership.  Professional tax and accounting advice should be obtained regarding the tax implications to both the dealership and the Owners due to Bonuses paid.

Debits

Credits

  1. The amount of Bonuses paid to owners

  2. The amount of the monthly provision for Bonuses to be paid to owners at a later date

 

  1. The amount of the monthly provision for Bonuses to be paid to owners at a later date

Example 1

Record the monthly accrual of $30,000 for the owner’s bonus.

Journal: Payroll Journal

Entry:

 

Debit

Credit

Account 098

Bonuses – Owners

$30,000

 

Account 329

Owner’s Bonuses Payable

 

$30,000

Comments

When Bonuses are paid to Owners during the month, the amounts of the Bonus payments are debited to this account.

When Bonuses are paid at a later date, such as the end of the year, the monthly provision for the Bonuses should be credited to Account 329 Owners Bonuses Payable and debited to Account 098, Bonuses-Owners.