the owner of a businss pays an employee an advance of 1000 and later takes money from his business , so what will be the entries. Usually when employee takes adavnce from company the entry will be
dr employee advance (current asset) 1000
cr cash 1000
but when owner gives advance and later takes money from busines, how will the entries be recorded....pls help..thanks!!!
It is just like, Mr. A gave money to Mr. B on behalf of Mr. C and taken back that money from Mr. C. So Ultimately Mr. C given money to Mr. B.
So Entry will be
Mr. B A/c Dr.
To Mr. C (or Cash)
No need to record the entry for cash given to employee by owner from his own pocket, because he has already taken that money back from the business. If he would have not taken that money from business then the entry would be like this:
Dr. Employee Advance (Current Assets)
Cr. Business owner (Current Liabilities)
And when the business will pay back to owner his money another entry would be like this:
Dr. Business owner (Current Liabilities)
Cr. Cash (Current Assets)
It will round off Business owner's account to NIL
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