Using Freight-In with expense claims

Hello,
I’m completely new to this group, so I hope I’m doing this right! I’m converting some entries over to expense claims to clarify my accounts/transactions. I’m doing this because on a few occasions I have had to use my personal funds to increase inventory on hand and to expand my sole proprietorship. I have purchased inventory items, that I had previously had under purchase invoices, which allowed the use of Freight-In. I was using a “cash account” created for my personal card purchases titled “owners contributions/purchases”. However, this doesn’t seem to be the correct way to do it but how can I include the cost of Freight-In with an expense claim? Is there a better way to record these inventory items that I plan to reimburse when the business has the money to do so?
Thank You!

You should go back to using purchase invoices for recording purchase invoice and then use expense claims to settle those invoices like this:

Note that I have customized my Accounts Payable to be Payable to Suppliers, but they’re really the same thing.

As far as recording freight in cost, you can continue with your previous process before switching to expense claims.

I would not change anything. It worked for you and yes maybe some minor stuff could be better, but my advice would be just to keep doing what you did and the time you save doing so will help you to relax. The monetary implications just seem too little to change.

If my testing and understanding is correct, your saying to continue with purchase invoices, which includes Freight-In. Then instead of using the NEW PAYMENT tab on the purchase invoice, I should create an expense claim for the full amount (included freight in, linked to the corresponding invoice #), then when able to make a payment from the business create a payment to the expense claim. Correct?
Thank you for your quick response Ealfardan!

If the solution provided by Ealfardan is inline with my understanding, I would prefer this method since it would group everything that I should be reimbursing myself for, without messing with my Cash on hand balance shown on the Assets sheet.
Thank you for your input!

@Ealfardan 's advice is good. I only indicated that sometimes imperfect is fine also.

Whatever you end up doing, don’t do that. Your personal funds cannot be a cash account of the business, because you never contributed the money. If you are going to contribute funds, they need to be posted to an equity account. That could be a capital account or an owner’s equity account, depending on your form of organization.

@Ealfardan’s technique is one method. What he didn’t explicitly say is that doing that is still buying something on behalf of the business with your personal funds. What you are buying is the payable. The liability created for the business in the Expense claims account is an asset for you.

However, the only advantage of doing things that way is the automatic distribution of freight charges to average cost of inventory items. You can accomplish the same thing with an expense claim, albeit manually, by entering the freight costs against Inventory on hand and the inventory item, with a zero quantity. The manual method is explained in the Guide: https://www.manager.io/guides/9610, although there it is done in the context of a purchase invoice. Same process.

Still another way to set things right is to create a petty cash account and go back and turn all your personal expenditures into contributions to the petty cash account. Then edit the payments you made against purchase invoices to have come from the petty cash account instead of the way you did it. This has the advantage of being closest to what was actually done. Your contributions to petty cash need to be posted to an equity account. My thinking here is that it is much cleaner from an accounting perspective to have your investments in your business residing in an equity account than in the Expense claims liability account, especially since you don’t know at this point when they can be paid back. In other words, keep things traditional.

Exactly.

However, the last method @Tut suggested is another valid method. In fact it seems easier.

Create your purchase invoice → copy to payment (petty cash) → copy to receipt (petty cash; capital account in the lines).

This will work better if you’re not going to refund yourself.

@Ealfardan @Tut & Eko Thank you all for helping to clear up some possible solutions. For me personally it would complicate things to do manual allocation of Freight-In to each line item based on multiple items all with different cost & weights. I already post all cash investments to Owners Equity as I don’t expect any payment on that until I am making a steady income capable of taking draws. For now I’m focused on doing reimbursements on prior purchases of tangible items. Also for me personally the Petty cash solution goes against everything I’ve ever known about the purpose of Petty cash. Not to say that method wouldn’t work, just not for me plus my goal is to refund.
Thank you again, hope this comes in handy for anyone else looking for a solution