recording monitary gifts as a for profit company


S

Sunfire

How would you record monitary gifts to a for profit company? For example, I
(the owner) want to give some of my personal money back to the business. How
would I report that in the accounts?
 
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L

Lance [MSFT]

The journal entry form can be used for this.

On the first line, pick the bank account where they money is going and enter
the amount you are investing in your business into the 'debit' column

on the next line, you pick the account that tracks the owners contributions
to the business -- use an equity account for this. Enter the amount donated
in the credit column. Then save the form.

This posting is provided "AS IS" with no warranties, and confers no rights.
 
S

Sunfire

So, basically I just make a journal entry that takes money from the owner
equity account nd transfer it to the checking account?
 
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L

Lance [MSFT]

This transaction would record that money is added to the checking account
-- bank account is debited in accounting terms -- and that the money
represents an increased investment in the business by the owner -- in
accounting terms, equity is credited.

Unlike asset and expense accounts, where a debit represents an increase.
Equity accounts increase when they are credited, so this transaction would
record and increase in both equity and cash rather than a transfer out of
equity and into cash.

You can use the bank transfer form to record it though, which is a bit
easier as you don't have to remember which account gets the credit and which
the debit. The checking account would be the transfer to account and the
equity account the transfer from account.

This posting is provided "AS IS" with no warranties, and confers no rights.
 

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