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April 25, 2024
Question

Journal entries for when someone other than partners investing in the company

  • April 25, 2024
  • 1 reply
  • 0 views

Hi,

 

Question for when someone other than partners investing in the company.

 

Here is the situation:

 

My mom puts money($25K) in my trucking business so I can buy a truck and whatever that truck makes, I give profit to my mom.

 

How do I put these transactions in the book? 

 

Business is owner of the truck and eventually once the truck is retired and sold, money received when sold would go back to my mom.

 

Thanks in advance

1 reply

April 25, 2024

Let me share a way to record the transactions in your books, @bazimov.

 

Firstly, we need to create an equity account to record the money you receive from your mom as a capital investment. Here's how:

 

  1. Go to the Gear icon and choose Chart of accounts.
  2. Select New.
  3. Click the Equity logo.
  4. From the Save account under dropdown, select Equity.
  5. Fill in the necessary details.
  6. Once done, click Save.

 

Next, let's create an asset account for the truck you purchased. Follow the same steps above, but select Asset instead of Equity. To record the profit you will give to your mom, create a new vendor and name it Mom.

 

Now, we can create a bank deposit for the investment into your equity account. Then, record the truck you purchased in your asset account. Finally, for the profit, we can use a check transaction.

 

Moreover, it's best to consult with your accountant for further assistance and information. 

 

Additionally, reconcile your accounts to keep them accurate and up-to-date.

 

Let us know if you need further assistance with recording the transactions. We'll be here to help you in any way we can.