USA Bonus accrual - year end adjustment

Joined
Feb 7, 2023
Messages
1
Reaction score
0
Country
United States
Hello everyone! First post here and it has to do with yearly bonuses.
During 2022, we accrued bonuses monthly to account for the 2022 bonus to be paid at the year end.
Now that 2022 is over, we find that we over accrued the amount and are paying out substantially less than we planned.
How do I properly adjust this in my books? Does the adjustment go in December 2022, or?
 

kirby

VIP Member
Joined
May 12, 2011
Messages
2,445
Reaction score
332
Country
United States
If your 2022 books are NOT already closed and results NOT reported then adjust in 2022.

if books already closed, then it depends on if the “extra” expense is material to your 2022 financials. If yes, do a prior period adjustment. If no, then adjust in 2023.
 
Joined
Sep 25, 2020
Messages
25
Reaction score
1
Country
United States
Hello everyone! First post here and it has to do with yearly bonuses.
During 2022, we accrued bonuses monthly to account for the 2022 bonus to be paid at the year end.
Now that 2022 is over, we find that we over accrued the amount and are paying out substantially less than we planned.
How do I properly adjust this in my books? Does the adjustment go in December 2022, or?
The current bonus accounting entries should be:

Dr. Accrued bonus payable. XXX
Cr. Cash. XXX

The monthly bonus balance remaining in the bonus payable account for each month should be adjusted as follows:

Dr. Accrued bonus payable. XXX
Cr. Income summary account. XXX
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Top