[Norcom K]

Hi everyone
I have qualified for a $10,000 wage subsidy that is to be paid out over the next 12 months. We've just received the first installment but I'm not quite sure how to record it.

My guess would be to set up some sort of receivable for the initial $10000 and draw it down that way; but ,I'm unsure of whether I apply it to a revenue account or some other account.

Thanks

[CaptainForest]

Typically we don't keep journal entries for our personal affairs, but we all have our own little qwerks.

Or perhaps you meant “I” as in your business which you solely own, which would make more sense.

Either way…

- you have qualified for this money
- this is to offset your expenses I presume?

The Journal Entry:
Dr. AR 10,000
Cr. Wages Expense 10,000


Why Credit Wages Expense?

The goal of this money is to help lower some of your expenses.

For example, you pay $30,000 to your employee's, yet you should only pay $20,000 because the government will give you back a rebate.

Therefore, this money should lower your current wage expense.

Now, if this subsidy is for prior periods as well, the JE will change a bit since you can't apply it all to this period.

So let's say $6,000 is for 2007 and $4,000 is for 2006.

You would:
Dr. AR 10,000
Cr. Wages Expense 6,000
Cr. R/E 4,000

[Norcom K]

Typically we don’t keep journal entries for our personal affairs, but we all have our own little qwerks.

Or perhaps you meant “I” as in your business which you solely own, which would make more sense.

I'm sorry. Looking back at my question it seems that I didn't explain it very well. Let me try again. The company that I work for as a bookkeeper has received the $10,000 to subsidize part of my earnings for the year. Every month, for the next 12 months we'll receive $833.33 as per the terms of the grant. This month was the first payment made to us. Here's how I've set it up.

DR. Wage Subsidy Receivable $10,000
CR. Misc Revenue $10,000

(I think after reading your post that I should have credited wage expense instead of misc revenue)

Then when payments come in

DR. Cash/Chequing Account $833.33
CR. Wage Subsidy Receivable $833.33

Any comments? Is this proper?

Thanks for your response

[CaptainForest]

This receivable that your company is getting. Is it contingent on you being an employee?

If you quit in 3 months, does the company still get the subsidy?

If they do not, then you can't record the entire receivable right now because it is not guaranteed.

If the company is guaranteed to receive this subsidy no matter what, then you can record it all as a receivable now.

[Norcom K]

This receivable that your company is getting. Is it contingent on you being an employee?

If you quit in 3 months, does the company still get the subsidy?

If they do not, then you can’t record the entire receivable right now because it is not guaranteed.

If the company is guaranteed to receive this subsidy no matter what, then you can record it all as a receivable now.

No, the company will not get the subsidy if I quit. The subsidy is paid once a month for the previous month and is based on my total hours for that month. If I work 0 hours for a month, we receive nothing for that month. Likewise if I quit.

The subsidy pays 60% of the employee's salary up to a maximum of $10,000. 60% of my salary is well over $10,000, so this is the maximum amount we will receive, but it would not be any lower.