Question

What is Bonus Pay, Vacation Pay and Holiday Pay. How they are recorded in books of accounts in cost accounting

Answer 1

BONUS PAY - Is a compensation given given by the employer to his employees in addition to the basic pay as an incentive.

VACATION PAY - Is a fringe benefit given by employer to parmenent employees which allows them to take earned leaves.

HOLIDAY PAY - Is the salary given by the employer to employee for the government declared non working days.

JOURNAL ENTRY OF BONUS PAY

Factory overhead /selling and adminstration expenses a/c Dr.

To bonus payable a/c

JOURNAL ENTRY OF VACATION PAY

Factory overhead /selling and adminstration expenses a/c Dr.

To vacation pay    a/c

JOURNAL ENTRY OF HOLIDAY PAY

Factory overhead /selling and adminstration expenses a/c Dr.

To holiday pay a/c

Usually fringe benefits are charged to each departments itself.It means bonus pay or vacation pay or holiday pay of factory workers are charged to factory overheads and sales and administrative employees' are charged to selling and administrative expenses.