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vnguyen1
Level 1

Unvested Deferred compensation

John Hancock give us $2000 credit for unvested $ deferred compensation .

 I  can use it for employer contributions for current employees . 

How do I book this $2000 in the book and spend it down for the future contributions ?  What accounts should be used for journal entry ?

Thank you for any help .

Vicky Nguyen

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1 Comment 1
Accountress-Fran
Level 1

Unvested Deferred compensation

You'll want to set up a prepaid asset account for the $2000 credit. Then create a journal entry to categorize the credit into that account. You'll debit the prepaid asset. The credit can either go to an income account like other income or can be used to reduce the same expense account you normally book employer contribution to, which may be a separate expense account or may be included with wages and salaries or other employee benefits. 

When you pay employer contributions, you will credit the prepaid asset for the amount used and debit the usual employer contribution expense account. 

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