Accounting for advances to employees and officers
2.2. Accounting for occasional advances to employees
When a company occasionally (i.e., not on a regular basis) provides advances to employees, accounting may be different. Assume that Joanne Smith, an employee of Company XYX, is scheduled to attend an industry conference. She receives a $2,000 advance for travel-related expenses. To set up an employee advance, the company makes the following journal entry:
Account Titles |
Debit |
Credit |
Employee Advances – Joanne Smith |
2,000 |
|
Cash |
2,000 |
When Joanne returns from the conference, she provides an expense report along with receipts and other supporting documentation for the following expenses: $750 air travel, $60 car rental, $600 hotel accommodations, and $300 meals. These amounts total $1,710. Joanne also returns the remainder of her advance in amount of $290. To record expenses and return of cash the Company makes the following journal entry:
Account Titles |
Debit |
Credit |
Cash |
290 |
|
Air Travel Expenses |
750 |
|
Car Rental Expenses |
60 |
|
Hotel Accommodation Expenses |
600 |
|
Meals Expenses |
300 |
|
Employee Advances |
2,000 |
If the actual expenses were more than the advance, the employer would have to reimburse the employee.
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