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H
heliosphere
March 23, 2024
Question

What would be the adjusting entry to record income from a personal account?

  • March 23, 2024
  • 2 replies
  • 0 views

My question is exactly as the title says. I started doing business in 2022 and received Venmo payments, which I then transferred to my account, then I made a business bank account in 2023 that I began to use. I'm not sure what the entry would be to record the income from 2022. I think I would credit shareholder's distribution, but I don't know what the debit would be. I would really appreciate some help. Thank you!! 🙂

2 replies

T
Teri11_2
March 24, 2024

The answer depends on the type of business entity and how you are filing taxes.

Sole Proprietor

LLC Partnership

S - Corporation

C - Corporation

Since you mention SH Distributions, sounds like you might be filing taxes as an S-Corp.

Definitely would not be a credit to SH Distributions since those s/b always debit entries.

Sounds like you need to debit Cash/Bank and credit SH Equity Contributions with funds

you are investing into the business. Not sure if you already paid taxes on that money but

if so don't record as income or you will pay taxes on it twice and nobody wants to do that.

The attached might help.

H
heliosphereAuthor
March 24, 2024

Yes, it is an S-Corporation. I haven't filed taxes yet for 2022.

Rainflurry
Rainflurry
March 24, 2024

@heliosphere 

 

Just to confirm, you are trying to record income received into you personal bank account in 2022, and that cash was never deposited into your business account, correct?  If that's the case, then the entry is a debit to 2022 Shareholder Distributions and a credit to the appropriate income (revenue) account.  If the cash was deposited into the business bank account, the proper entry is a debit to cash and a credit to income (revenue).  I don't see any scenario where you would debit cash and credit Shareholder Contribution.  That would bypass income.     

H
heliosphereAuthor
March 24, 2024

Hi,

 

That's correct; the cash was never deposited into my business account in 2022, as I didn't open one until 2023. Thank you so much for your help! 🙂

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