The owner’s capital account has been set up. He paid an organizational cost for the company. The expense claim has been recorded with him as owner being the one who submitted it. He does not need it to be repaid to him in cash, rather it should increase his capital balance and be treated as a capital contribution (i.e., “Funds Contributed” = investment in the company).
I have read this 2017 thread (Paying Expense claims to employees) and the Guide, but I’m not sure if I’m supposed to do something else to account for this transaction, or if Manager is automatically treating it as a capital contribution.
Is there something I’m supposed to do to finalize how this is handled in Manager?
Thank you, @tony, for helping me get my mind around how Manager does this. I have some questions for you or anyone else who wants to chime in.
(1) I had experimented with Expense Claims to employees, and I noticed that if I put the employee as the “Paid By” person, Manager automatically created a liability, and all I had to do was input the proper expense account (i.e., Manager was using the Employee data to create the credit side [liability] of the transaction, and I only had to list the debit side [expense account]).
Am I right that Manager does not automatically credit any account when the “Paid By” person is an owner (Capital Account)? In that scenario, seems to me I have to tell Manager both what to debit and what to credit. Is that true?
(2) I’m used to double-entry accounting software which doesn’t debit and credit stuff under the hood, but allows the user to choose what all the debits and credits will be. So, I’m experiencing a learning curve. What report or tab can I use to see what journal entries Manager is doing “under the hood”? (I have run a Trial Balance, and it looks correct. The General Ledger Transaction report shows more, but it doesn’t show the Capital sub-account.
(3) Back to the transaction I’m trying to record. This is what I want:
Debit Organizational Costs 9.85
Credit [Owner 1] Capital Account (sub account: Capital Contributions) 9.85
Thank you, @eko. It seem to me that some of the info there in the Guide (https://www2.manager.io/guides/6898) is incomplete. With the Expense Claim as I entered it, there is no amount for the owner shown under “Expense Claims” on the Capital Report. So maybe it would be better for me not to have that added line for the amount to be credited to Capital Acounts… Then when one looks at the Capital Report, one can see what was directly contributed as capital and what amount was contributed via Expense Claims.
Manager will treat it as a capital contribution by selecting the Capital Account and Capital Sub Account in the Account field of the Expense Claim.
However, that provides a different result than the guide predicts as far as reporting is concerned.
EDIT: I think I’m beginning to understand how Manager is doing this. If and only if there is a balance (not zero) as the total of all the lines in the journal entry at the bottom of the Expense Claim, Manager will automatically credit an account based on the info in the “Paid By” field. If the listed debits and credits balance to zero, Manager does not do that.
Following my edit screen above where you would NOT add a line item for the Capital account holder you would notice that it Credits the Owner equity, so when selecting capital accounts you would see a -2,000 listed. If the business decides to pay (refund) the owner then it needs to create a Payment and select the Capital account and sub-account and insert the 2,000. The bank account of the business will then reduce by 2,000 and the -2,000 in the capital account disappears.
