Accounting




March 5, 2008

What is the entry for a loan to an employee?

When a company lends money to one of its employees, the company will debit the asset account Loans to Employees and will credit the asset account Cash.

The portion of the balance in Loans to Employees that will be due within one year of the balance sheet date is reported as a current asset. The portion of the balance in that account that is not due within one year of the balance sheet date will be reported as a long term asset.

Interest on the loan should be accrued by the company and reported as other revenue. The company’s entry to accrue interest is a debit to the current asset Interest Receivable and a credit to Interest Revenue.






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Comments

6 Responses to “What is the entry for a loan to an employee?”

  1. shermay on March 5th, 2008 9:02 am

    What is provision and between liabilities and reserves?

  2. hersey on March 25th, 2008 3:35 pm

    What do you do with the interest income(revenue) if payments are not made? Want to set it up on a cash basis so that everything works even if a payment is not made. Thank you.

  3. junaid khan on April 2nd, 2008 1:03 am

    what is capital expenditures and Revenue Expenditures?

  4. ram on April 7th, 2008 3:09 am

    taking loan 100000 and with 15%interest and he pay 60000. interest rate per year

  5. Amos on April 10th, 2008 1:41 pm

    This is with reference to Junaid’s question. Capital expenditures are long term in nature and benefit the orgainsation for more than one accounting year. Whereas, revenue expenditures are short term in nature and benefit ther organisation within one accounting year.

  6. ACoach on April 21st, 2008 12:11 pm

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