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Samuelsing0
Level 1

Journal entry question

I have been working with a book keeper and she informed me she would need to do journal entries for the transactions that happened in my personal account that was used for business. Ex: using personal savings to pay an expense for the business. 

I was asked to create a spread sheet of the bank statements with it categorized in a credit debit format.

 

Ex. If there is an advertising expense of 5,000 and I paid that expense with my personal account on the 3/2/20

 

journal entry date: 3/2/20 

Debit:
owner investment 5,000

Credit:

advertising 5,000

 

is this correct?

 

2 Comments 2
Rustler
Level 15

Journal entry question

Not if the account titled owner investment is an equity account type.

Journal entries should be the exception when using QB, they often do not work as you think they should, and when you use inventory type items they never work for inventory. It is much better to use the forms on the home page the way QB is designed to be used. Journal entries also bypass accrual/cash reporting, and will not show on many reports.

Have her bring up an expense transaction
line one: advertising expense, 5,000
line two: owner equity investment, -5,000
save the zero dollar transaction

note that line two is a negative number

 

john-pero
Community Champion

Journal entry question

And to top it off, in a journal entry. Expenses are debits and source of funds for expense (chevking, owner equity,etc) are credits. Your bookkeeper would have yoj reducing business expenses instead of increasing. 

 

One way to handle off the books transactions tgat affect the books is with a dummy clearing bank type account. Recotd expenses, such as advertising psid frl. Personsl funds, as coming from this clearing account. Then turn around and make deposit to clearing account from owner contribution (equity)

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