Creating a Journal Entry as an owners loan under liability account

1

Scenario: Owner buys new computer (capital) with personal funds.

This is the way I would think it should be done

  • Create new liability Account Owners loan
  • Create new asset account Computer equip

Journal entry

  • Narration → New computer
  • Accounts
  • Computer equip → Debit → $1000 with 10% GST
  • Owners loan → Credit → $1000 GST Free

GST worksheet has:

  • GST sales of $1000 which is not correct, it seems liabilities and equity are being counted as sales. I have made no sales at this point.
  • $1000 as Capital Purchases and $90.91 GST payable which is correct

The Summary Financial statement has $1000 under Liability-> Owners loan which is correct.

Question 1: Is this not the correct way to do it? What am I missing, I’am no accounting guru.

Question 2: I’m using version 14.4.13, but can’t find the Documentation tab mentioned in the Forums, in-fact I cannot find any documentation.

1 Like
2

In journal entry, don’t use GST Free tax code. Leave the tax code field on Owners loan line empty so this $1,000 credit doesn’t get included as a GST free sale on your GST calculation worksheet.

Otherwise everything you’ve said is correct.

Regarding documentation, we’ve been experimenting a lot what would be the best model to deliver it. In the end we settled with basic wiki.

3

Thank you, that’s a very subtle but important change.
This is a very useful piece of software, and your support is excellent.
Keep up the good work.

4

If I get a loan from the owner and I have placed it under loan equity, how do I show it when its repaid (i.e the loan)