Accounting

Salary Ledger Account

A salary ledger account is one of a company’s expenditure ledger accounts.

The contra account for a salary ledger account is usually a ledger account in the name of the employees to whom the salary is paid. A separate ledger account is kept for each employee. Every employee is like a supplier of work services, similar to suppliers of goods.

For example, if one employee named Greg James works at a bakery, and earns a monthly salary of $4,000, registration takes place in the following two ledger accounts at the end of the month:

  1. Salaries of Production Employees – the ledger account is debited for $4,000 – the company received work services.
  2. Greg James – the ledger account is credited for $4,000 – employee Greg James gave work services.

    Registration is as follows:

Salary Ledger Account

Particulars Debit Credit Balance
Particulars of Transactions  Contra Account
January 2008 salary Greg James 4,000 4,000D

 Greg James (Employee) Ledger Account 

Particulars Debit Credit Balance
Particulars of Transactions  Contra Account
January 2008 salary Salary 4,000 4,000

When Greg James is paid his salary on the ninth of the month (the money is transferred from the bakery’s bank account to Greg James’s bank account), the payment transaction will be registered in the following two ledger accounts:

  1. Greg James – receives money.
  2. Current Account – shows money paid.

Greg James (Employee) Ledger Accoun

Particulars Debit Credit Balance
Particulars of Transactions  Contra Account
January 2008 salary Salary 4,000 4,000
Payment for January 2008 Current Account 4,000 0

Current Account Ledger Account

Particulars Debit Credit Balance
Particulars of Transactions  Contra Account
12,000D
January 2008 salary Greg James 4,000 8,000D
Salary Ledger Account535Salary Ledger Account