Bookkeeping › Cash Book & Petty Cash
How do you record wages paid net, with deductions, through the cash book?
AdvancedAnswer
Net wages paid to employees are a cash book payment: credit bank with the net pay and debit the wages/net wages control. Deductions (tax, NI, pension) are held as liabilities until paid over; the gross wage is the total expense. The cash book captures only the actual cash movements (net pay and later the deductions payment).
Gross 1,000, deductions 250, net 750: Cr Bank 750 (net); later Cr Bank 250 (to authorities).Real-world example The cash book records the 750 net paid to staff now and the 250 deductions paid to the authorities later.