badly done investment

[nightingale]

I am cleaning up the bookkeeping for a small business that has a couple of investors but I really am not a bookkeeper or accountant. One of the investors put $X into the company, but instead of giving us a check for X he paid $Y of our expenses directly and then gave us the check for $X - $Y. I don't know how to manage the situation in our books since a significant dollar amount of our expenses now did not go through our accounts. Is there a correct way to do this?

p.s. This happened months ago and was just never recorded properly, so I can't undo the situation. Thankfully the investors have since learned to keep their accounts separate.

 

[The Finance Writer]

Deduct the expenses on the company's books and offset those debits with a credit to the investor's capital account. That's the easy way if this is an unincorporated business.