processing a payment using personal funds

My boss incurred huge expenses on a company business card but recently he paid them off with his own personal money.  He does not want a reimbursement of the payments but wants the invoices to show as paid.  I know this is not good practise but he insists on doing it this way.  How can I show the invoices paid without actually processing a payment that would affect the bank balance since the money did not come from the business?  Help!

  • 0

    Even if you have set up the credit cards as 'Used', the balance is still tracked in the G/L, and you can post transactions directly against the account.

    So you can record this with a journal entry crediting the appropriate account (owners' drawings or shareholders' loan?) and debit the credit card account.

    If your company works with an external accountant, they would be able to help you with the particulars of how to record the credit to the owner.

    I hope that helps, please post back

    Randy

  • 0 in reply to RandyW

    Yes, that was my thinking as well but The owner doesn't want it posted to owners drawings so I'm at a loss as to where to post it.  I think you're right...I'll have to consult with the accountant.

    Thanks Randy

  • 0 in reply to GOLDMINE

    The owner may not understand that in a double-entry system, each source of funds must have a destination.

    I'm sure the accountant will be able to show him that it has to be recorded somewhere on the balance sheet, or it'll end up on the very taxable Income Statement.

  • 0 in reply to RandyW

    Yes, he does understand the double entry system.  He just wants the balance depleted in Simply but without it showing as an owners contribution or shareholders contribution.  I was just at my wits end trying to figure out another way to reverse the payable without showing it was through the owners/shareholders contribution.  On the other hand, he doesnt' really want to contact the accountant because he'll be told the same thing (and charged for his advise).  I think I will just deal with this the way it has to be dealt with and he can deal with the accountant at year end.  Thanks everyone for your input.