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 |
a. Business Accounting Managers (BAM) Awards Bank System (ABS) b. Award Option expenses
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Example 1
Record the monthly incentive in the amount of $5,323 for the parts manager.
Journal: Payroll
Entry: |
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Debit |
Credit |
Account 026-07 |
Incentives – Supervision – Parts & Accessories Department |
$5,323 |
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Account 321 |
Salaries, Wages & Commissions Payable |
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$5,323 |
Distribution of Expenses
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Departmental Distribution |
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026 Incentives Supervision |
New Veh. |
Used Veh. |
Lease & Rental |
Mechanical |
Body Shop |
Parts & Access. |
Gen & Admin. |
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01 |
02 |
03 |
05 |
06 |
07 |
09 |
Incentives paid or payable to the general manager |
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Total compensation |
Incentives paid or payable to the business manager |
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Total compensation |
Incentives paid or payable to the lease and rental department manager |
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Total compensation |
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Incentives paid or payable to the parts and accessories department manager |
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Total compensation |
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Incentives paid or payable to the combination general manager and new vehicle department manager |
Time |
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Time |
Incentives paid or payable to the service department manager |
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Time |
Time |
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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.