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Level 2

How to record purchase that is done using owners personal funds

The owner did not use credit card to pay. He took it from his personal bank account via direct debit.So I would have to create the direct bank account from the chart of accounts. Then post purchases as the expense and charge off to  cash/ direct debit to make the payment to the supplier
 
 To record purchase as inventories  Is this done through journal entry?  and I then  put it to current asset as inventories .  and owners equity. so the accounts  balance.. And to pay the owner we would credit   by either check or bank deposit  and debit  the bank account.
 
Please explain if this is what I should do.
Not clear 
1 Comment
Level 6

How to record purchase that is done using owners personal funds

The situation can be handled in two different ways:

 

First is to Debit the Purchase and Credit the Owners Account to increase the owners capital contribution to the organisation.

 

Secondly we can book the purchases and create a liability to owners account and reimburse the same via check or bank transfer to clear and sort the things out...