Reimbursing Friend for Purchases Made on His Credit Card
I have a new company and my friend, helped me out by purchasing some office equipment for my business using his personal credit card. I now have the money to pay him back, but I do not know how to properly record this using QuickBooks Online. What is the best way to record this transaction?
I have some information that I'm sure will help you get this transaction recorded. Since it was your intention to pay the friend back for the equipment he purchased, this can be considered a Loan from him to you. I'll guide you through the steps of recording this exchange below:
Set up the loan
From QuickBooks Online, navigate to the Accounting tab. Select the Chart of Accounts section.
Click New to add an account. Set the Account Type to Other Current Liabilities, and the Detail Type to Loan Payable.
Leave the balance empty for now and click Save and close.
Record the equipment purchase
Click the Plus (+) icon and select Journal Entry.
On the first line, select the Equipment or Asset account that will hold the purchased item and enter the amount under Debit.
Select the new Loan Payable account on the second line and Credit it for the same amount.
Make a loan payment
Click the Plus (+) icon again and select Expense or Check.
Under Account Details, select the Liability account and enter the payment amount.
If there are interest charges on the Loan, enter them as an Expense account item on the second line. Select Save and close.