What is the entry when a company lends money to an employee?
When a company lends cash to one of its employees, the entry will include a credit to Cash and a debit to an asset account such as Notes Receivable from Employees (if a promissory note is involved) or Other Receivables-Advances to Employees (if a note is not involved).
When the company earns interest on the loan, the interest should be credited to Interest Revenue or Interest Income and should be debited to Interest Receivable or Cash.
About the Author: Harold Averkamp (CPA) has worked as an accountant, consultant, and university accounting instructor for more than 25 years.He is the author of the 2010 Master Accounting Download Package which has been praised for it's ability to simplify accounting in a way that anybody can understand.
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WHAT IS NOTES RECIEVABL IN BLANCE SHEET ASSETS OR CREDIT
Hello Ahmed, Bit late in the reply…Notes Receivables is an Asset. And as far as use of word Credit in ref to Balance sheet is not right, it should be Liablites.
when the company lends money to an employee cash/ bank account is credited & employees account is debited, in the books of company.In Balance sheet employyes account is shown under the head of Loans and advances on asset side.