March 17, 2008
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Where should I enter unpaid wages?
Under the accrual basis of accounting, unpaid wages that have been earned by employees should be entered as 1) Wages Expense and 2) Wages Payable or Accrued Wages Payable. Wages Expense is an income statement account. Wages Payable is a current liability account that is reported on the balance sheet.
The recording of wages that have been earned but not yet paid or processed through the routine payroll entries is referred to as accruing wages. This is done through an accrual-type adjusting entry.
Learn more about Payroll Accounting and Adjusting Entries. AccountingCoach.com also has FREE interactive crossword puzzles on each of these topics.
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If a worker takes home, for personal use office supplies values at $600 What would be the effect ofon the income statement, balance sheet and the flow sheet?
“If a worker takes home, for personal use office supplies values at $600 What would be the effect ofon the income statement, balance sheet and the flow sheet?”
In a business where the supplies are inventoried, a periodic inventory of the supplies (either end of period or for purposes of reordering) would cause a reduction of the “supplies” asset (a credit entry), and increase the period expense for supplies (a debit entry). This would cause the income statement to reflect a lower net profit before taxes by $600.00.
This assumes such tracking of the supplies inventory is actually taking place. Otherwise, the simple periodic act of replacing the supplies would be marked as a reduction of cash (credit to asset) or an increase in accounts payable (credit to a liability) if terms are available, with a corresponding debit to expenses (again lowering net profit before taxes by $600.00, assuming the costs have not risen since the items were last ordered).
As for the net effect of this being “employee pilferage,” that is a complexity that would be 1) only tackled upon discovery, if that event should happen, and 2) not generally an impact upon the overall effect, unless for some reason the employee could be billed or otherwise pursued for the value of the supplies. I don’t believe it enters into the domain of unpaid wages.