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Level 1

Posting Business credit card payment for personal purchases.

The owner is using a credit card for both personal and business.  In order to reconcile the card both personal and business transactions have been posted.  Personal has been post to Owner Equity and the A/P Credit Card; Business has been posted to the Expense Account and the A/P Credit Card.  Payments are made from the business account for both Business and Personal purchases.  The posting for Personal and Business payments is debit bank account/credit A/P Credit Card.  Shouldn't Owner Equity have an entry for the "draw" to pay his portion of the credit card?  What would be the other side of the entry (debit Owner Equity/???)?
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Best answer 12-10-2018

Accepted Solutions
Level 15

when you posted the  CC charge to owner equity that was a...

when you posted the  CC charge to owner equity that was a draw, it debited equity reducing it

View solution in original post

4 Comments
Level 15

when you posted the  CC charge to owner equity that was a...

when you posted the  CC charge to owner equity that was a draw, it debited equity reducing it

View solution in original post

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Level 3

consider you already have the draw to owner equity.by pos...

consider you already have the draw to owner equity.by posting personal charges to the owner draw account.    

The credit card charges create the expense or when personal expense are record.    

The payment is going to reduce the credit card liability.

Think of it this way.  you are not trying to dedit the business expenses for the credit card payment. it was done when you recorded the charges.  Works the same for the owner personal charges, the equity is being debited by the credit card charges.

Level 1

Re: Posting Business credit card payment for personal purchases.

I am assuming this is a sole proprietorship?  Because a S or C corp would be handled differently, correct???

Level 1

Re: Posting Business credit card payment for personal purchases.

I have the same issue only I am an S corp.  I am using a personal credit card to get miles.  I charge everything to the credit card, personal and business.  I have a spreadsheet created to precisely separate the charges between business and personal.  Since I am an S Corp, I plan to post the personal expenses to an other asset account called "owed from Shareholder" or A/R-personal.  When I repay the S corp for the personal expenses I will deposit the cash and decrease the A/R-Personal to zero.  Does that sound correct?

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