When I started my business, I bought stock out of my personal account. Now I would like to allocate it to my loan account, but can’t seem to get it right as the only option I have is to pay it using the bank or petty cash options. Otherwise it goes under suspense.
You need to furnish more information about your form of organization and chart of accounts. Buying stock implies a corporate entity with shareholders. A personal loan account implies, perhaps, some type of limited company with private ownership.
You also wrote of both allocation and payment, which would be two different things. What exactly did you originally do? And what are you trying to accomplish now?
We are 2 partners. Private ownership.
If we pay personal money into the company it’s easy to reconcile to a loan account.
The challenge is where we’ve purchased goods/equipment in a personal capacity and then need to capture the invoice and allocate to a loan account. Not sure how to allocate.
1- You can create purchase invoice for that suppler and add new line in the account name choose the partner loan ac put the amount paid with -(negative sign)
2- consider the loan paid in cash the make receipt voucher to loan account and the make payment voucher allocating the payment to supplier invoice
3- record the entry with Journal Voucher where you will
Dr exps or inventory or other account
Cr partner loan
I’m not sure why you would be using loan accounts in your situation at all. Partners’ investments are normally accounted for in capital accounts. These investments are not normally considered loans, because they are not typically repaid on a scheduled basis, but are recovered through distribution of profits to capital accounts and subsequent drawings. See Set up and use capital accounts | Manager and Use capital subaccounts | Manager.
What you describe is an additional contribution in kind to your capital account. The way to handle it is through an expense claim. Once you have set up your capital accounts for the partners, they will automatically appear as expense claims payers, and goods purchased with partners’ personal funds will be posted to the relevant partners’ capital accounts. See Use expense claims | Manager.
By stock I am assuming you mean Inventory.
Depending on the frequency of this type of transaction, you could use a Journal Entry.
DR - Inventory / CR Loans account.
Being partners, means you can setup your “partnership” accounting as fits your purpose.
If you choose to use loan accounts (current accounts) as well as capital accounts, then go for it.
Loan accounts give you far better reporting freedom when there is a disproportion contribution beyond the partnership agreement’s initial contribution.
Can you explain why you think so, given the built-in Capital Accounts Summary report? Default reporting for capital accounts easily handles disproportionate contributions (via receipts or expense claims), distributions, or drawings at any point in a business’ life, whether during initial setup or beyond. It is broken down by member, definable as to time period, and even makes provision for a footer where disproportionate actions can be explained. How do loan accounts provide better reporting freedom?
Because you aren’t polluting equity with liabilities.
Because you are reporting liabilities as liabilities.
Well, those observations are valid if you accept the notion that partners’ investments are liabilities rather than capital contributions. That would be an unusual perspective.
When one can accept that within the partnership you can have both a capital account under Equity and a loan account under Liabilities. That is, the partnership decides how it wants a particular transaction to be reflected in the financial statements. For example: it would be totally inappropriate to record a repayable short term funding contribution as equity, when it is in effect a liability.