Canada How to record utilities expense and retroactive payment?


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Hi everyone,

I just started working for a small contractor business and I have been asked to enter 2020 transactions into QuickBooks. In regards to all utilities expenses the owner who has an office in the basement for business purposes paid for the utilities for the whole year out of his own pocket.
1) if using accrual basis of accounting all utilities should have been accrued monthly?

2) how to record the payment since the company did not pay with the business debit card but instead the expense was paid by owner with persona funds?

what is the best way to address Accrual of the expense retroactively as well as the payment and reimbursement to owner?

thanks
EC
 
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Is IFRS the applicable financial reporting framework? If yes, then payment made by the owner should go into your equity if he is acting in his capacity as shareholder/owner.

As for question 1, your 2020 P&L should show the entire utilities expense for the year, whether it is paid in advance or not. Doing the monthly accrual is something of an internal reporting issue that will not impact the financial statements at year end.
 
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You may consider the payment by the owner of the utilities expense as a short-term loan from the owner to the Company, instead of going through shareholder's equity.
 

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