Procedures for loan repayments and refunds

[malfaour]

Topic 1:
In numerous occasions, I sent money from my personal account to my company’s business account; I then created director’s loan account under liabilities and assigned to it all these transactions. My friends also lent my company money by sending money directly to its business account; I then created friend’s loan account under liabilities and assigned to it their transactions. In order to return the money (loan) back to myself, I have used the company’s business account to purchase some personal items. I now have to pay my friends their loan back and I am planning to transfer money directly from the business account into their account.
Question: How I could assign these transactions?

Topic 2:
Intro: I purchased various items to the company using the business account and in few occasions I had to return some of them so I got refund. I then created a refund account under income and assigned all the refund transactions to it. However, it now looks as if my income has increased.
Question: How I could go about this so that this refund transactions don’t look as income?

[Tut]

In the future, limit your topics to a single question with a title that relates to it. Otherwise, people will not read it.

Accounting for your personal loan repayment depends on your form of organization. You refer to yourself as a director, but is your company incorporated? That is, were shares of stock issued? Or do you own it as a sole trader or proprietor?

Regardless of your form of organization, you pay back your friends’ loans using Spend Money from any cash account you have. Allocate the transaction to the friend’s loan account. See the Guide below:

Spending money in cash account

Money withdrawn from your bank account should be recorded under Statement balance column. [image] When you click on the amount under Statement balance column, you can click Spend money button to record new transaction. [image] Every recorded transaction must be properly categorized. For example, if you have spent 200 for telephone, you would record it like this: [image] You can also split the amount across multiple expense categories. This is useful if spent money represents paying off cre…

When you return something you paid for at the time, Receive Money and allocate to the same expense account where you allocated the original purchase. See:

Receiving money in cash account

Money deposited in your bank account should be recorded under Statement balance column. [image] When you click on the amount under Statement balance column, you can click Receive money button to record new transaction. [image] Every recorded transaction must be properly categorized. For example, if you have received 1,200 from customer for sales, you would record it like this: [image] If you have received from customer 1,250 but bank has charged 50 fee, you need to split the transaction us…

If you return something originally recorded via a purchase invoice, issue a Debit Note.

[Brucanna]

@malfaour

I have used the company’s business account to purchase some personal items

Spend Money with the Account = Director’s Loan - this will reduce the account balance.

@malfaour

I now have to pay my friends their loan back

Spend Money with the Account = Friend’s Loan

@malfaour

How I could go about this so that this refund transactions don’t look as income?

Receive Money with the Account = (where ever you put the expense on purchasing)
This will reduce the expenses account as you have no longer spent money on that eepense

[malfaour]

Thank you for your help and the quick reply.

I am sorry I am new to this, do you mind explaining how to do this in more detail please.

[Brucanna]

When you received the loans - I am assuming you used Cash Accounts - Receive Money.
For the repayments you would use Cash Accounts - Spend Money

[malfaour]

Thank you for your continued support.

Yes, I have a limited company and I am very sorry for the long questions. In the future I will follow your advice and keep it short.

Actually, my friend transferred the money to the business account, I then uploaded the bank statements into manager and assigned the transactions to the friends loan account that is under the liabilities ( used bank rules). Should I have used cash accounts- receive money instead and then cash accounts - spend money? Do I have to do this manually or is it ok to upload the bank statements and do what I mentioned. I am not sure what to do now. please help me. Many thanks indeed.

[Brucanna]

So why don’t you transfer the money back and use bank rules again when you upload the bank statements and use the same accounts

You either use Receive/Spend Money or Bank Rules not both - please read the guides, the link is across the top

[malfaour]

Many thanks indeed.