how to write a journal entries for capital increase and show on capital account reports?
Read this Guide:
Hi - sorry for simple question but as a beginner to all this can you please clarify, in the Guide “Tracking Balances in Capital Accounts” and under the heading “Drawings” how did you get to the screenshot shown? It isn’t a journal entry as it should have 2 lines - so where do I start a Drawing transaction?
Thanks
It’s a Spend money transaction under Cash Accounts tab. Note the language: "When you transfer funds from a business account to a member or if the business makes a payment…[emphasis added]
All cash account transactions in Manger are single-line (unless you add more) because you don’t need to worry about balancing debits and credits. Manager does that for you. So, for example, when spending money, the cash account is always the one credited and the account you select is the one debited. For receiving money, the reverse is true.
Thanks @Tut and that makes sense now.
For a sole trader - I have read in the forums that it is advised to rename the Retained Earnings to “Owners Equity”. I have also read in this guide that its advised to rename Capital Accounts to “Owners Equity”. Which is the better option?
I would not say advised. The option is one to consider under circumstances described in the Guide you referred to. It is a simple approach that may meet your needs. But it also has drawbacks. It does not, for example, give as quick a picture of how much you have taken in draws during an accounting period. For that, the Capital Accounts module would be better. But that module was designed to accommodate multiple members, though it can also be set up just for one. It is really a matter of personal preference. You might also want to consult with an accountant. And there may be local tax laws that influence the decision.
One reason the renaming of Retained Earnings is nice is that sole proprietorship charts of accounts are not usually set up with a retained earnings account. But Manager is structured around it and you cannot delete it, so you might as well use it.
Many thanks @Tut - I will go with renaming Retained Earnings and see how it works as I don’t need to see how many draws - or by whom.
Hi,
Why I cannot book a transaction in CASH IN HAND from CAPITAL ACCOUNT? Seems like I can only DEBIT CASH in BANK and not CASH IN HAND!
I am trying to receive CASH in HAND as A Capital Investment but cannot see the account CASH IN HAND in JV entry section!
First, you need to update your software. Cash in hand, as a separate module, was discontinued long ago. All cash account, whether in hand or in bank, are now under the single Cash Accounts tab.
Second, before you can enter any cash transaction, you must create the relevant cash accounts.
Third, cash transactions can only be entered under the Cash Accounts tab, not as Journal Entries.
For more guidance on receiving money, see the Guide:
Dear Tut,
Thank You for the quick reply. A little more help is needed on the situation!
Lets say I have 10000$ Initial Capital investment in my bank account and my Partner has 5000$ cash in hand as a Initial Capital Investment.
for 10000$, Relevant Capital account will be credited and Cash in Bank will be Debited.
for 5000$, ideally the entry should be the same as Relevant Capital Account Credited and Cash in Hand Debited! Here I see the problem that I dont see the cash in hand in the list at this stage.
Or else I have to create a new CASH IN HAND - Capital account!!
No, you should not create a cash in hand capital account. Create capital accounts for yourself and your partner according to this Guide:
Create cash accounts as needed according to this Guide:
Receive money under the Cash Accounts tab, allocating $10,000 to your capital contributions account and $5,000 to your partner’s capital contributions account. In both cases, I assume you would receive both amounts in a company bank account created under the Cash Accounts tab. (Money in your personal bank account or your partner’s hand does your company little good.)
Unless you intend to maintain a petty cash fund and deposit your partner’s contribution there, you have no need for a cash in hand account at all. But if you decide you want one, create it under the Cash Accounts tab, but do not check the box indicating it is maintained by a financial institution.
(This discussion assumes your software is up to date. If it is not, some of it will make no sense.)
How to pass journal entry of Capital investment?
You probably will not use a journal entry, but a receipt. See these Guides:
https://www.manager.io/guides/8936
https://www.manager.io/guides/14397
https://www.manager.io/guides/7820
The last Guide mentioned includes a specific example in the final section on receiving a capital contribution.