328 Employees Incentives / Bonuses Payable

Liabilities

Accrued

Synopsis

Account 328 is established to record the amount of Employee Incentive Pay or Bonuses payable or accrued.

Debits

Credits

  1. Monthly provision to equal year-to-date bonuses payable to employees

  2. Net payments made

 

  1. Monthly provision equal to year-to-date bonuses payable to employees

Example 1

Record the monthly accrual of $2,500 for employee bonuses.

Journal: Payroll Journal

Entry:

 

Debit

Credit

Account 097

Bonuses – Employees

$2,500

 

Account 328

Employee’s Incentives/Bonuses Payable

 

$2,500

Example 2

Record the payment of employee bonuses totaling $30,000 at year-end.  The payroll taxes accrued are $9,900, and the retirement benefits accrued are $2,400.  The monthly payroll tax expense is $2,295 and the monthly retirement benefit expense is $600.

Journal: Payroll

Entry:

 

Debit

Credit

Account 328

Employee’s Incentives/Bonuses Payable

$30,000

 

Account 025-09

Payroll Taxes – General & Administrative

$2,295

 

Account 029-09

Retirement Benefits – General & Administrative

$600

 

Account 202

Cash in Bank

 

$20,505

Account 323

Payroll Taxes Payable

 

$9,990

Account 330

Retirement Benefits Payable

 

$2,400

Comments

A credit balance represents unpaid employees bonuses.