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Hi,
I want to set up a staff loan and repayment system using Payroll and Accounting. Payroll makes provision for that but wants me to set up the accounts that it should debit and credit when deductions are made for repayment of the loan.
I was thinking I should open a Staff Loans account in category Current Assets. I will credit my Bank account and debit Staff Loans when I pay the money to the employee. Payroll wants me to set up two accounts in order to handle the repayments. One account to debit and one account to credit. It seems obvious that the credit account should be the Staff Loans account so that successive repayments each month will eventually add up to the amount that I posted (debited) when I paid the loan amount to the employee. This account will then have a zero balance at the end of the repayment period. But my problem is what account to use as a debit account for Payroll? Will it be some sort of control account, and if so, in what category? What worries me is at the end of the repayment period this account will reflect a debit balance equal to the loan amount. Surely that cant be right.
I would appreciate it if someone could give me some advice on this.
Thanks,
Andre
I want to set up a staff loan and repayment system using Payroll and Accounting. Payroll makes provision for that but wants me to set up the accounts that it should debit and credit when deductions are made for repayment of the loan.
I was thinking I should open a Staff Loans account in category Current Assets. I will credit my Bank account and debit Staff Loans when I pay the money to the employee. Payroll wants me to set up two accounts in order to handle the repayments. One account to debit and one account to credit. It seems obvious that the credit account should be the Staff Loans account so that successive repayments each month will eventually add up to the amount that I posted (debited) when I paid the loan amount to the employee. This account will then have a zero balance at the end of the repayment period. But my problem is what account to use as a debit account for Payroll? Will it be some sort of control account, and if so, in what category? What worries me is at the end of the repayment period this account will reflect a debit balance equal to the loan amount. Surely that cant be right.
I would appreciate it if someone could give me some advice on this.
Thanks,
Andre
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