Purchases by Director

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Experienced User dawn101
80 Posts
Experienced User
Australia
Experienced User

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Purchases by Director

The loan to Director is created as the liability account.
If a purchase is made by the director for the business,
I debit the required expense code and credit is Loan to Director.
However, if a payment is made which is a personal in nature is made from.the
company account, I debit the Loan to Director Account and credit Bank.
Please let me know if this is the right approach.
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Ultimate Partner DuncanS
1,744 Posts
Ultimate Partner
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Re: Purchases by Director

@dawn101,

 

Your accounting principles are correct.

 

I would have a Current Liability called Loan from Director.

This is setup as a Credit Card.

 

With Business purchases paid by the Director, use Spend Money with the Bank Account being Loan from Director

 

With.Personal nature paid by the Company, use Spend Money posting to the Loan from Director.

 

Hope this helps.

 

Duncan

Duncan Smith
Business Advice + Tax
Helping business owners build a better business since 1998
E expressgst@optusnet.com.au T 02 9904 3672 7 days
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