Journal Entry for Outstanding Salary

Outstanding Salary is a liability for the firm. Outstanding salary journal entry is passed to record the salary that is due concerning the employees but not yet paid. When salary is not paid on time, it is shown under the Liabilities side of the balance as an ‘Outstanding Salary’ which means it has now become the liability of the firm to pay salaries.

Outstanding Salary Journal Entry

Journal Entry:

Example 1:

1. At the year’s end, Company A has an outstanding salary of ₹25,000.

Solution:

Example 2:

Company B had to pay salaries of ₹1,00,000 to its employees on March 10, 2023, but it is time to close the accounts on March 31, 2023, and salaries are still unpaid.

Solution: