All Respected Members,
Please educate me that if an employer wants to give benefit to an employee by writing off his loan which is payable to firm ? What will be accounting treatment for it.
Please also share journal entry.
Thanks in advance for your precious time and efforts to reply this query.
1) Either credited to him against adjusted in any expenses or
2) Make Cash receipts of that same value & credited to him.
Though Employer wants to give benefit to the employee against loan , so one should have to write off all his debit balances , we have only 2 choices either make any journal entries & debit to the any expenses like office expenses,factory exp., salary, bonus, or ex gratia kind of or credited him by showing cash receipts or kind of because all n all this is just a book entries .
When company gave loan to employee
Dr. Loan and advances or employee or receivables
Cr. Bank/cash.
When writing off that loan
Dr. Loan write off - income statement
Cr. Loans and advances, employee or receivables
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