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Post Info TOPIC: Accounting for equity in lieu of salary
Koonstheman


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Accounting for equity in lieu of salary
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I have a very confusing situation that I've probably made worse with erroneous entries. My company hired someone in the summer, and he agreed to be paid for six months in stock; I will give this amount as 60 in total, 10 per month. However, to make matters more complicated: 1) we are making cash payments of 2k/month to him and 2) I am supposed to show the 60 in equity at once.

So the question is: what should I have booked the 60 against at the start? An accrual account against which I would then offset the monthly salary payment (P&L) of $2? What about the other $8? Would I do a journal releasing those $8 from the accrual?

Thanks

 

 

Thanks



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Anderson Accountancy


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Hi,
You're right, this is a good one.

By stock, I assume you are referring to shares? And when you say 60, this is 60 shares correct?

Can you also confirm:- are you saying that he receives income of 10k per month and 2k is in cash and the remaining 8k is shares? I am a little confused by your wording. If you can clarify, I should be able to help more.

Dave

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HendyPhilhendy


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I note that you have quoted dollars. Is this therefor American? Terminoligy indicates this and it may be that treatment varies.

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