Quick Books Question/Help

[MrsAn]

HI!!

I need some help with a Quick Books Question. I need to enter transactions that were paid in cash for a client. What is the best way to show these charges??

Thanks for any help!

[Office Goddess]

If the client is a sole prop or a llc and paid the expenses personally (as opposed to the business) you can do a g/l entry:

DB - expense
CR - owner equity

If the owner wishes to be reimbursed, set them up as a vendor and issue a check.

[Tomekia Lloyd]

Yes,

Lily's way is a great way to do it.

Another way, if you would like to keep it separate from the draws and contributions of the owner, and your client uses cash often, is to use the petty cash account to record it the way you would a bank transaction.

The balance can be covered by:

DB - Cash Account
CR - Account the money was withdrawn from (Owner's Equity, Business Account)

[SaraASB]

IF you need to capture the vendor name and date of each expense, one way is to set up a "credit card" type account and name it "Expenses paid by owner." Or Stockholder loan-Smith.. if he is a corporation. Use the Enter credit card charges screen to enter each receipt. Then if he is lending the business the funds, it is already in a liability account. You could journal entry the balance into a normal liability account so as not to confuse the CPA! ("What credit card?") Or.. journal it into a Drawing-Equity account. Point is, we can help you run the software, but the tax accountant needs to instruct you on how it should flow in the books. Each type of company is different.

[lf business]

All great ideas!

I wanted to add that you could create a general journal entry,

Debiti -all the expenses incurred and
Credit - a Shareholder Loan account (Other Liability Acct)

and at the end of the year or when the owner would like to get reimbursed you can

Write a check to the ownder and choose the Shareholder loan account.

[rambookkeeping]

Or, you can do a "petty cash" entry if you have a petty cash account setup with that company. There are different ways to do things; up to you I guess.

[rambookkeeping]

Sara, that is an excellent way to do this! I never really thought of this but this would work wonderfully! And yes, always enter a description because once the tax accountant (someone like me) goes to do the taxes, they are going to get confused and you don't have to retrace your steps! Good idea!!! Thanx!

[rambookkeeping]

Lily, quick question, why would you CR the owners equity account? I have never heard of this before. Wouldn't you DR the expense account and CR the cash account? Then when you want to reimburse the "petty cash" fund, you would DR petty cash and CR cash for the reimbursement. Maybe I AM missing something. Thanx for the input.

[Office Goddess]

Lily, quick question, why would you CR the owners equity account? I have never heard of this before. Wouldn't you DR the expense account and CR the cash account? Then when you want to reimburse the "petty cash" fund, you would DR petty cash and CR cash for the reimbursement. Maybe I AM missing something. Thanx for the input.

Whoops! Good Catch, Rachelle! I DID list those backwards. Boy - egg on MY face! Thanks for fixing this (every bookkeepers nightmare is reversed entries!)

[VA-rific]

Companies usually have a clients bank account from which expenses are paid on behalf of clients. In that case you would DB-Expense account and CR-Clients bank account OR if no such account exists DB-Client's account (Debtor's a/c) and CR-bank/cash.

I am no expert but I think that these are options.