16 BULLETIN 865, U. S, DEPARTMENT OF AGRICULTURE, 
G. ACCRUED LIABILITIES. 
INTEREST ACCRUED (G1). 
DEBIT: CREDIT: f 
1. With the interest accrued on notes *1. With the interest received on notes 
receivable during the period. receivable. 
2. With the interest paid on notes pay- 2. With the interest accrued on notes 
able. payable during the period. 
The above method is believed to be advisable for smaller concerns, however. When 
the amount of interest accrued on either notes receivable or notes payable is consider- 
able, it is suggested that separate accounts be opened for each of the above items, 
showing Interest Accrued and Notes Receivable as an asset, and Interest on Notes 
Payable as a liability. (See also discussion under Interest, p. 30.) 
PAYROLL (G 2). 
DEBIT: CREDIT: 
1. With all amounts paid to employees 1. With the amount of unpaid labor as 
ior services, including advances. shown by the Balance Sheet at the 
time of opening the books. 
2. With the amount of the pay roll, 
including all advances, at the close 
of the period, as shown by the time 
sheet. 
Tt is necessary to include all employees on the pay roll regardless of the department 
in which they are employed. The following Journal entry, which should be made at 
the end of each period, will illustrate the operation of this account. Example: The 
entire pay roll is $400 and $20 has been advanced during the period. - 
JOURNAL ENTRIES. 
Desir. CREDIT. 
$135 Factory Labor. 
265 Office Labor. ; 
Payrolle 24 2202 esa! ern: Scene eee $400 
(For periodical pay roll.) 
380 Payroll. 
Bank: Accoutitsi-nc 4 67 haa ae ee 380 
(For payment of periodical pay roll.) 
Inasmuch as the $20 was charged to the Payroll account at the time the advance was 
made, the credit of $380 to the Bank Account will close the Payroll account. 
Occasionally an employee may desire an advance on his labor account, in which case 
the Payroll account should be debited for the amount advanced. It is not considered 
advisable to carry Ledger accounts with employees because of cash advances, but very 
careful note should be made of such advances to prevent duplicating the payment. 
Should an employee purchase merchandise, the sale should be charged to his per- 
sonal account. At the end of the period, or whenever the pay roll is made up, a check 
should be drawn in favor of the employee for the full amount of his wages. The em- 
ployee should then settle his account in the regular way. By following this procedure 
the records will reflect clearly the transactions involved. 
