You need to post a screen image of your chart of accounts.
Once we see that, we can better advise what you need to do - otherwise we are just guessing what accounts to use
I am not sure what Capital in this context means. In the context of Manager it is under equity and refers to Common Stock (ie owner shares).
When reading your post it seems more that the Regulator requires you to deposit a certain amount of money into the Company Bank Account. Assume this is $10,000 but you can only deposit $5,000 then the advice was to put the remaining $5,000 as something that in future has to be deposited in the bank account.
If this is the case maybe the following would work (sure some others may improve this). All is illustrated by screenshots:
1) In Customize activate Special Accounts
2) Create a Control Account for Special Accounts in Settings for example for "Owner Regulatory Deposit which should be grouped under liabilities (second screenshot below)
2nd screenshot assing control account “Owner Regulatory Deposit” to liabilities:
3) Enter a new receipt (I setup an example Bank called Test Bank):
4) Create a Journal Entry as follows:
5) Your Summary screen should now look something like the following:
You will notice that $10,000 is under liabilities, which the Owner deposited in the Bank and Accounts Receivable as technically this amount is owed to the Owner as not earner by the company.
As for using Expense Claims to get the remaining $5,000 into the bank, this is confusing because the Owner would actually increase the Accounts receivable so not sure if that advice is correct. What is happening is that the Owner is capable of putting more funds in the bank. So you can add a new receipt in which the Owner actually manages to deposit $3,000 into the bank, thus reducing the Accounts receivable by $3,000 to $2,000 and increase Cash at Bank by $3,000 to $8,000. The liability remains $10,000 as explained before, see screenshots below:
Later when the Owner is able to deposit the remaining $2,000 another receipt is added to clear the Accounts Receivable and have the $10,000 in the Bank as required by the Authorities. As mentioned this is in this case a Loan (Liability) from the Owner to the Company. So this was accomplished by the Journal transcation described above and the 3 Bank receipts (screenshot below)
The final Summary should then be:
As mentioned this is one of the interpretations and solutions. Take care!
Hi, thank you so much for this explanation and way on how to do it.
But I still have questions:
*yes, Capital account here means Equity, I am not sure why my desktop of this software mentioning that.
- You advised to make as Liabilities, but this is surely not a company Liabilities, right? So, is this applicable for the GL report?
- The owner spent money from own pockets and should be payable into equity that the owner’s owe as per Regulatory. So, is this also applicable to put it as your way?
Again, thank you so much for this
It all depends on how the company was registered. For example in our case we incorporated limited liability companies in which we had to indicate the number each Owner invested per share and thus the value of investment (so called Common stock) which is per owner listed under Capital Accounts (activated using Customize). This would be straightforward in the example where you need to have put $10,000 as investment in the bank but where this for various reasons would not be possible. Equity is not a liability and will thus be treated differently as explained below:
1) Enable Capital in customize:
2) Click on Capital accounts tab and create an account (in this case called it Common Stock Owner
3) Create a receipt for the $5,000 that you are able to deposit in the bank (Test Bank):
The summary should now have $5,000 in the Bank and $5,000 in Capital Accounts and look like:
4) Enable Sales Invoices in customize:
5) Ensure that you create a customer such as Capital Deposit Owner:
6) Create a sales invoice for Capital Deposit Owner for the remaining $5,000 regulatory deposit as follows (NOTE leave quite a number of items blanc as in screenshot):
You will now have a summary screen that has $5,000 in Accounts receivable, $5,000 in Cash at Bank and $10,000 in Capital Accounts, and looks like:
- Whenever you are capable of transferring funds to the bank account you need to create receipts against this Sales Invoice so Click on New Receipt when viewing the sales invoice (screenshot top right):
8) So enter the receipt details similar to below:
You will now have a summary screen that has $2,000 in Accounts receivable, $8,000 in Cash at Bank and $10,000 in Capital Accounts, and looks like:
9) Your sales invoice should now have changed to include this receipt as shown below:
- You can add the remaining $2,000 in the same way to this invoice until cleared. At the end you will have $10,000 in Cash at bank and $10,000 in Capital Accounts under equity.
But this does not resolve on how to allocate the expense to pay the equity deficit…
This is now getting unwieldy
If the owner pays a business expense using his own money, this can be entered
- As a journal entry
Debit business expense account
Credit Capital Deficit Account
or using the Expense Claims
- Enter an Expense Claim using the Owner rather than an Employee - this will
Debit the business expense account
Credit the Owner’s Capital Account
Then enter a journal
Debit the Owner’s Capital Account
Credit the Capital Deficit Account
It isn’t clear to me exactly what elgertrading meant in the first post - I understood that the owner had to deposit 10,000 in the bank and so Debit bank 10,000 and credit Capital Account.10,000
If they did not have 10,000, they could pretend they had by putting 5,000 into the bank and creating a debt of 5,000 on the Balance sheet (Capital deficit Account) so that the Capital account was credited with 10,000.
Hi @Joe91 Yes, that is exactly what I am doing using your way, now I will try to use this on the next step as you mentioned:
Then enter a journal
Debit the Owner’s Capital Account
Credit the Capital Deficit Account
Yes, the owner did not use transfer to the bank for this capital deposit, he then asked to use his expenses to cover the deficit balance…
This is still giving me doubt, hahaha. I put all as you mentioned, but in the reports showing no data for Expense claims ( I put Owner’s equity/capital as Payer) and in GL report the Capital deficit rcvble is in Credits (should be in Debits) and Capital in Debits (should be in Credits)… 
Guys, so now I found out way how to do this:
First, capital deficit recvbld:
JE
(Dr) capital deficit rcvble
(Cr) capital
Expense Claims:
Create all the claims and post into cost expenses (payer is Payee - not Owner/capital account)
Receipt to clear the expenses:
(Dr) Cash on hand/bank account
(Cr) capital deficit rcvble
So:
capital deficit rcvble 0
capital/equity increase
Haha, I don’t know if you alrdy adviced me that, maybe I was the one that are still confused… but it all sorted now the GL and Expense reports are showing exactly like we need. Including the Capital deficit rcvble account in Assets.
Thank you All !!! You guys are brilliant!
Just one question. Is there anything owing in Expense claims?