026 Incentives - Supervision

Expenses

Personnel

Synopsis

The Incentives, spiffs and commissions paid to supervisors in addition to regular salaries are recorded in Account 026, Incentives – Supervision.  Ordinary compensation such as salaries and wages are properly recorded in Account 021, Salaries – Supervision.

Debits

Credits

  1. Amounts paid and accrued for incentives, spiffs and commissions for supervisors

  2. Special payment of additional incentives to supervisors

  3. The cost of factory programs benefiting supervisors such as:

a.   Business Accounting Managers (BAM) Awards Bank System (ABS)

b.   Award Option expenses

 

 

Example 1

Record the monthly incentive in the amount of $5,323 for the parts manager.

Journal: Payroll

Entry:

 

Debit

Credit

Account 026-07

Incentives – Supervision – Parts & Accessories Department

$5,323

 

Account 321

Salaries, Wages & Commissions Payable

 

$5,323

Distribution of Expenses

 

Departmental Distribution

026 Incentives Supervision

New Veh.

Used Veh.

Lease & Rental

Mechanical

Body Shop

Parts & Access.

Gen & Admin.

 

01

02

03

05

06

07

09

Incentives paid or payable to the general manager

 

 

 

 

 

 

Total compensation

Incentives paid or payable to the business manager

 

 

 

 

 

 

Total compensation

Incentives paid or payable to the lease and rental department manager

 

 

Total compensation

 

 

 

 

Incentives paid or payable to the parts and accessories department manager

 

 

 

 

 

Total compensation

 

Incentives paid or payable to the combination general manager and new vehicle department manager

 

Time

 

 

 

 

 

 

Time

Incentives paid or payable to the service department manager

 

 

 

Time

Time

 

 

Comments

Extra compensation, paid to managers and supervisors, in addition to regular compensation recorded in Account 021, Salaries – Supervision, is debited to this Account.  Guidelines for paying incentives should be established and clearly communicated to the managers and supervisors.  Generally, incentive should be performance based using criteria such as sales production, expense control, and training of subordinates to improve productivity.  Most successful incentive plans reward supervisors for producing increases in departmental operating profit.