what is the journal entry for this situation? and why?
situation:
Gratuity for this year TK1000000,which TK700000 shows in
income statement and TK150000 will shown in next 2 year
each.(this is a management decision)
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Answer Posted / darshan
profit & loss a/c........Dr. 700000
outstanding liability....Dr. 300000
To Gratuity a/c 1000000
from the co.s point of view:-
Rs. 700000 is the expense for this year which is
debited in p&l a/c
whereas, Rs. 300000 is the outstanding liability of the
company as 1000000 is gratuity amount for this year and
management decides to show it in next two years equally.
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