Accounting entry for loans & advances to staff

You will have to create a personal ledger for the entry to reflect in employee's personal account. You can write proper narration in the voucher and if need be, you can prepare a promissory note and ask the employee to sign.

The above journal entries are correct except the mistake pointed by praveen.

Your entries is correct, but you have to use particular Employee's account instead under current account of Advance to Employee account like....

1) ABC (Employee) A/c. Dr  18000 (B/S A/c)

    To Bank A/c. Cr. 18000

2) Salary A/c. Dr. 7000 (P/L A/c)

          To ABC (Employee) A/c. Cr 3000

          To Bank A/c. Cr 4000

do only 1 thing..... create that employee's personal account and show it under the same head/group in which it is already shown i.e. Advance to Employee A/c (Current Assets)...

2 entry salary a/c 7000

advance emp. a/c 3000

bank a/c 4000

Sir, please clarify in that case two personal account of an employee will be opened ? One will be salary account and one will be advance or loan account?