Employees loan


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Good day, I would like to know how will Balance sheet show the loan given to employees as receivable and how will it's entries been done.

Does separate loan account needs to be made for each employee loan and then double entry on cash on bank and employee loan to be done?

When receiving payment for loan how will it be entered
 
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Fidget

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To record the loan:

Dr Staff loans (balance sheet)
Cr Bank (balance sheet)

Do the opposite as repayments are received, unless the repayments are being taken via payroll. In which case the double entry will be:

Dr Payroll control account (balance sheet)
Cr Staff Loans (balance sheet)

If repayments are made in this way, then the payroll journal should do those entries without there being any need for an extra journal.

You don't have to have a separate account for each employee loan. You can have a single account for staff loans, so long as the entries to it reference the employee number in the original loan/bank journal and repayments journals. It keeps things tidy in the ledger.
 
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I was the accountant at a business that occasionally gave loans to employees in distressed situations. We had a Loans Payable on the books, and the money would come out of the employees' ADP deductions. When I coded the payroll, I would make a giant compound entry and a debit to Loans Payable would be included there. I also kept an Excel worksheet with payoff detail, and this had to match to the Loans Payable account. I'm studying now for the CPA exam (using UWorld Roger), and know that in the course of business, these types of loans happen. There is data that if the employee is stressed about bills, they lose productivity.
 

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