Glenn <bgh145[at]hotmail.com> wrote:

- quote -

The plan is OK in the long run. When you retire or quit do it after you
have received a large bonus.

--
Ron

In article <501db426.0407080956.2fe18be3[at]posting.google.com> , Glenn
<bgh145[at]hotmail.com> wrote:

- quote -

That is the problem with those kinds of deals. Should the owner's
BMW and salary paid to his 13 year old kid count against your bonus?

- quote -

You are right and you are wrong. There are two ways to do accounting.
If the company is on cash based accounting, then you recognize the
bonuses when they are paid. If they are on accrual accounting, then
they should match the bonus as an expense to the time period that it is
for. As an example, if they expect to pay you a $12,000 bonus for the
fiscal year of 2007, they should do a journal entry each month of the
year 2007 for accrued bonuses of $1000. This will be an expense. When
they actually pay out the bonus, the will do a journal entry to issue
the bonus check, and match against the accrued bonuses. This gets a
little messy since they are going to have to estimate the bonuses,
and account for the estimate being off if the bonus comes in at a
different ammount.

Given all of that, lets say that you think that your 2003 bonus will
be smaller because the 2002 bonus check was cut in 2003. This all
works out to be a wash in 2004 when your 2003 bonus check is cut in
2004. The net effect is essentially the same, and the checks would
not be materially different if they matched up the years. As a result,
I wouldn't worry too much about it.

-john-

--
================================================== ==================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ==================

I work for a company where part of my salary package includes a profit
sharing plan that is tiered according to what the store's profit
margin is for the year. My question is concerning how some of the
expenses are being factored into the equation to calculate that profit
margin.

The company includes the amount they paid me for the previous year's
profit sharing in the current year's expenses. I was told that a
profit sharing check is the same as a payroll check and that it should
be counted as an expense in the year it was cut. Since it was June of
2003 before the 2002 profits were finalized, that meant the check was
cut in 2003 and added to 2003 expenses. This extra expense drops the
profit margin for the year and in turn drops the amount I get paid in
profit sharing significantly.

I love my job and I've tried to not let this get to me, but it just
doesn't feel right. I am not a "money person" at all though and don't
know if this is really the right way to do it.

Thanks for any help you can provide,
Glenn