Holiday Leave Accurals

Zowie

Hi

Please can someone help me. I have been asked by our company to start doing a monthly holiday accrual to help their accounts when they shut down for certain months of the year and the staff take large amounts of their holiday entitlement. At the moment I currently do the following payroll journals

Dr 7006 - Gross Wages
Dr 7007 - NI
Dr 7010 - Holiday Paid
Cr 2210 - PAYE/NI
Cr 2220 - Net wages
Cr 7051 - Employee Pensions Cont

They wish for the accrual to be done on a monthly basis so I have worked out that the company liability each month would be £2500.

I have set up a new nominal code for the holiday pay liability 2215.

So for this month i have a holiday pay accrual of £2500.00, i have paid £1638.64 in holiday pay which means that i should be left with a liabaility of 861.36 for holiday earned but not paid and i can not think where to post this debit balance.

Cr 2215 - Holiday Pay liability £861.36
Dr????

If i post it to 7010 this will make the amount of holiday paid incorrect, do i need to set up another expense code? or am i doing this wrong in the 1st place ???

Thank you

reader

I would put the difference in 7010, or create another account called 7011 and put it in there.

You could call account 7011 'Holiday pay charge'

Either way (i.e. 7010 or 7011) the management accounts need to reflect the holiday pay as an expense so the managers/directors (who look at the accounts) can factor in the cost of holiday pay when they determine whether a particular month has been successful or not.