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our owner paid us salary in advance(from his personal account) before the end of the month on 24 th dec 2011. But on 7th jan 2012 he ll be paying us the full salary for each employee with the condition that we should pay him back after getting the salary. How should this be accounted for? entries pls.
Though u have not explained the situation completely but still i m answering what i have understood
Your owner paid u December’s salary on 24th dec right… the salary which he paid out of his personal account will not be entered in co’s books…
Secondly at 31st december an entry wud b pased in co’s books debiting salary exp and crediting liability with the whole amount of exp for that month.. (assuming co’s G.L is updated at the end of every month for payroll expense)
entry on 7th january wud be
Liability Dr
Bank CrThe cash which you wud be paying back to owner would also not be entered in co’s books… as owner and co both are separate persons..!!
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