The owner of the purchases items for the business which is for resale. These are considered inventories. How do I record this in quick books. I am currently recording it by journal entry to owners equity and inventory(current asset). How does this show up in the purchases account.?
I am doing it correctly?
Solved! Go to Solution.
Yes. You're doing it correctly, Sheen Solutions.
I'm here to help you record the purchases in QuickBooks Online.
First, we'll have to create a new credit card account. This will be used to gather all the purchases using the owner's personal funds. Here's how:
- From the Accounting tab, select Chart of Accounts.
- Click the New button.
- Select Credit Card as the Account Type, and Detail Type.
- Give it a Name.
- Click Save and Close.
Second, we'll have to create an expense transaction to enter the details of the purchases. Let's make sure to select the credit card account we created.
Lastly, create a Journal Entry if you want the purchases to end up in the Owner's Equity account.
In case the owner wants to reimburse the purchases to themselves, they can write a cheque and then enter the total amount. Then, select the credit card account. Here's an article for the step to do it: How to write a cheque.
Let me know if there's anything that I can help. Keep safe!
I know I will have to pay the owner by doing a check from the company bank account and post it to the credit card account in quick books.
However the balance sheet will still have this amount in owners equity. Explain
Thanks for getting back to me, Sheen Solutions.
There's nothing to worry about when the amount still shows on the Balance Sheet report.
An equity account will display on both the Balance Sheet and Statement of Equity report. This represents the amount of equity in your company at a certain time. This also means that this is the assets your company holds net of any outstanding liabilities.
I've added this article for more information: Understanding the Equity Accounts on Your Financial Statements.
Feel free to get back to me if you have other concerns. Have a great day ahead!