What is Journal entry of advance to employee

What is Journal entry of advance to employee

It will be treated as Current Assets.For example, if an employee is given money by a company and the money is expected to be repaid or spent for company purposes, the amount will be recorded in this current asset account until it is repaid or until the expense documentation is provided.Note when money is paid advance to the employee it is the prepaid expense for the company, therefore, journal entry is made it will be debited.

Example: Paid salary to customer Rs 20000 which include Rs 5000 advance.

Salary A/c 15000

Advance to employee A/c 5000

To Cash A/c 20,000

(being salary paid in advance)

Salary paid in advance to the employee is adjusted in next month salary paid to the employee.

Salary A/c 15000

To cash A/c 5000

To advance to employee A/c 10,000

(being salary paid and advance adjusted)


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  1. purchased goods for resale for 15000

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