Loan is deducted from salary

This query is : Resolved

Ankit Bubna (Querist)
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14 August 2013 My client deducts the loan installment from the salary of the employee and therefore he debited the salary a/c with the net figure only. For Eg: Loan installment = 1000, Salary = 5000. After deducting the installment it passed the following entry:
Salary Dr. 4000
Loan to employee Dr. 1000
To cash/bank 5000

Is the above accounting correct?

Rupesh Jain

Rupesh Jain (Expert)
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14 August 2013 YES IT IS CORRECT ENTRY

@VaibhavJ

@VaibhavJ (Expert)
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14 August 2013 hi

Entry seems to be wrong, If loan is deducted from Salary of Rs. 5000/- then Bank should be Credited by Rs. 4000/-

Entry would be:

Salary Debit 5000
..To Loan ...1000
..To Bank ...4000

Thanks//VaibhavJ

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