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How do I handle accidental purchases?

I purchased a non-business related item and accidentally used my business debit card. I countered that bank transaction by a matching deposit amount taken from my personal to my business bank account. How can I handle these cancelling transactions that I don't want to record as an expense and an income?

I also have some Paypal activity where they take out $.70 and put it back, more cancelling stuff that doesn't affect the bottom line.


Thank You,

Rob

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Best answer 12-10-2018

Accepted Solutions
Established Community Backer ***

assuming you are taxed as a sole-p or partnership enter t...

assuming you are taxed as a sole-p or partnership

enter the CC charge and use owner/partner equity drawing

enter the payment and use owner/partner equity investment

I recommend you have the following for owner/partner equity accounts  (one set for each partner if a partnership)

owner/partner equity
owner/partner equity drawing - you record value you take from the business here
owner/partner equity investment - record value you put into the business here

Paypal, do the same thing if you want the reconcile to match what is in QB. If the paypal transaction was not personal just use an expense account called clearing, the expense and the deposit both use that account and the funds will wash to a zero balance

View solution in original post

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Established Community Backer ***

assuming you are taxed as a sole-p or partnership enter t...

assuming you are taxed as a sole-p or partnership

enter the CC charge and use owner/partner equity drawing

enter the payment and use owner/partner equity investment

I recommend you have the following for owner/partner equity accounts  (one set for each partner if a partnership)

owner/partner equity
owner/partner equity drawing - you record value you take from the business here
owner/partner equity investment - record value you put into the business here

Paypal, do the same thing if you want the reconcile to match what is in QB. If the paypal transaction was not personal just use an expense account called clearing, the expense and the deposit both use that account and the funds will wash to a zero balance

View solution in original post

Not applicable

If I have the owner/partner equity drawing (to record val...

If I have the owner/partner equity drawing (to record value taken) and owner/partner equity investment accounts (to record value put in), I don't understand the purpose of the 3rd owner/partner equity account. Can you explain?
Established Community Backer ***

it is overall equity, at the start of a new year, you jou...

it is overall equity, at the start of a new year, you journal drawing and investment to the parent equity account, then journal retained earnings (last years net profit). I prefer to make drawing and investment sub account of the main equity account.

so drawing and investment show you easily what you have done during the year
Not applicable

OK, thanks for clarifying. I am a sole proprietor LLC - d...

OK, thanks for clarifying. I am a sole proprietor LLC - does this apply equally to me?
Established Community Backer ***

yes LLC is a state only business formation, the IRS does...

yes
LLC is a state only business formation, the IRS does not recognize it, so you are either a sole-p, a partnership, a sub-chap s or a c corp for tax purposes.  And that is what drives your accounting in terms of equity
Not applicable

Thank you Allstar. I did fail to mention my status. I am...

Thank you Allstar. I did fail to mention my status. I am a one man band S corporation, no employees nor partners. I did see something in the PDF manual about a general ledger but was a little timid about trying that without seeing an example. I was afraid to start that, mess it up an then be stuck with it.

I'm not sure about the owner equity investment part as I'm not investing. I just want to put back what I accidentally spent. Maybe that clearing idea is the way to go to record weird stuff. If they cancel can they not be deleted before I ask QB to Match the transactions?

Thanks,

Rob

Established Community Backer ***

I recommend you have the following for owner/partner equi...

I recommend you have the following for owner/partner equity accounts  (one set for each partner if a partnership)
owner/partner equity
owner/partner equity drawing - you record value you take from the business here
owner/partner equity investment - record value you put into the business here

investment just means putting value into the company

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