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res@finisroadrvp
Dec 16, 2021 3:34 PM UTC
Solved

Can someone help with how to enter start up costs for four partners? We have four equity partner accounts set up already.

Each partner has a stack of receipts with a total of what they each spent as start up costs. Instead of listing each receipt individually how can I just use one figure for each partner and enter that figure in their equity account? There are too many receipts to enter individually. Do I use journal entry? If so, the first line says account. What account should I choose? Should I create an account called start up costs? I appreciate it any assistance. Thank you.
Rainflurry
RainflurryAnswer
Dec 16, 2021 5:33 PM UTC

It is important that you differentiate whether the receipts are for assets (i.e. office equipment, inventory, etc) or for expenses (legal fees, office supplies, travel, etc).  If you enter them in a lump sum, keep in mind that all of the expenses or assets will hit the books on the date of the journal entry.  For example, if these costs have been incurred over several months, it will appear as though they were incurred on the date of the entry which will skew the financial statements.  To answer your question, you will want to set up equity accounts for each partner and can then do a journal entry by debiting the appropriate expense/asset account and crediting each partner's equity account.

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3 replies

Rainflurry
RainflurryAnswer
Dec 16, 2021 5:33 PM UTC

It is important that you differentiate whether the receipts are for assets (i.e. office equipment, inventory, etc) or for expenses (legal fees, office supplies, travel, etc).  If you enter them in a lump sum, keep in mind that all of the expenses or assets will hit the books on the date of the journal entry.  For example, if these costs have been incurred over several months, it will appear as though they were incurred on the date of the entry which will skew the financial statements.  To answer your question, you will want to set up equity accounts for each partner and can then do a journal entry by debiting the appropriate expense/asset account and crediting each partner's equity account.

res@finisroadrvpAuthor
Dec 18, 2021 9:44 PM UTC

I understand.  So it is best to create a journal entry for each startup transaction?

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