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June 28, 2023
Question

When i enter an expense, but the money used is an advance from the shareholder, what should i put in the Payment Account? Do i input an Accounts Payable account?

  • June 28, 2023
  • 1 reply
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How do i account for this?

1 reply

June 28, 2023

Hello there, @kynethjane-kjabi.

 

Let me help you record your transaction in QuickBooks Online (QBO).

 

To start with, let's set up an equity account to record the capital investment. Once done, make a deposit into your equity account if you don't import bank transactions.

 

  1. In the left menu, click the + New button and select Bank deposit
  2. From the Account ▼ drop-down menu, choose the bank account you're depositing the money into.
  3. Enter the Date you deposited the money.
  4. In the Add funds to this deposit section, enter the name of the investor in the Received from field.
  5. Choose the appropriate equity account from the drop-down list in the Account field.
  6. Specify a Payment method.
  7. Enter the investment amount in the Amount field.
  8. Select Save and close.

 

When finished, you can create a journal entry to record the expense using the advance from the shareholder.

 

  1. In the left menu, click the + New button.
  2. Select Journal Entry.
  3. On the first line, select the expense account for the purchase.
  4. Enter the purchase amount in the Debits column.
  5. On the second line, select Partner's equity or Owner's equity.
  6. Enter the same purchase amount in the Credits column.
  7. Select Save and close.

 

For more details about the process, see this article: Record an owner's contribution or capital investment in your business.

 

You may also consider contacting your accountant or tax advisor. They can provide more information on recording this transaction.

 

In case you'd want to pay back the funds from the investment in the future, check out this article for guidance in recording: Record paying back an investment.

 

Should you have any other concerns, don't hesitate to leave a comment below or start a new thread. We're always here to lend a hand.