Linda Artesani shows how to record a $9,000 bill paid partly from the company account ($6,000) and partly from the owner as a personal loan ($3,000). She creates a clearing account to hold the loan, pays the bill from it, and records the $3,000 as a Loan to Officer liability in an S-corp.
Chapters
Hi there, Linda Artesani from Community Live, and I am solo today. My partner Matthew is moving into a new office, so he's real busy, so I'm picking up the slack. So I have a question here from Spentron, and it's regarding internal and external payments. So basically, he or she said that they have an invoice for $9,000, they paid $6,000 from a linked account in their QuickBooks, and their boss paid the remaining $3,000 on the account. It's not linked to QuickBooks Online. How do I show that balance is being cleared off and the bill paid in full, basically. So when they said invoice, they actually meant a bill, which invoicing and bills are 2 different ways. In QuickBooks language, you would call it a bill, but I understand what they meant. Basically, it's easy to show the first payment, right? So I'm going to show the scenario, and I would have a few questions actually to Spendtron. So one question was, okay, the boss put in $3,000. Was it from another company that he moved money over from, or was it because they had money— they didn't have enough money in their operating capital, so they Actually loan their business money. So I'm going to do this example based upon the second scenario, that the boss needed to loan money to the business to pay the bill in full. So we'll come over to QuickBooks here, my company file. We'll go into the vendors, and I actually created a bill called— for $9,000. So hopefully this will make it nice and clear. Here's the bill for $9,000, and here's the payment of $6,000 that came out of the operating account. So I want to show the rest of this balance being paid. Well, first, my first step as a bookkeeper would be to— if I was new to the company— would be to go to the gear and find out what kind of company it is. What kind of entity is it? Is it a sole proprietor? Is it an LLC? In this case, it's an S corp. So an S corp would have If the boss loaned the business money, it would be considered a loan from the officer. So my next step would be to go to the chart of accounts and look for the loan to officer account. And you can just come right in here and say loan to officer, and there's loans payable officer. So it's here. Perfect. So now I need to show the loan from the officer, the $3,000, and then I need to see the— show the $3,000 payment going out and paying the bill. None of that happened at the bank level at all, so I can't really put it in my operating account. But what I can do is make a clearing bank account. So I've actually already created the bank account called clearing. Here's my clearing bank account. So what I'm going to do is I'm going to come over and put the $3,000 in from the boss into the clearing bank account. So I'm going to come down here and it's received by boss. So I'm in the clearing bank account. I'm going to come over here and just put the loan from the officer. And then some really good notes because years down the road when the loan may get paid back and the CPA may say, you know, where did— what did you loan the $3,000 for? You want to put that in here. So loan to business to pay balance on bill, and you put, you know, the bill number in here from a wireless And then put the amount in that they loaned the business, so $3,000. Save and close. So now the money's there in the bank, in the fake bank account. So now let's go back and pay the bill. So I'll come back over to my vendors, come back to A Wireless, and I'm going to pay my bill. Make the payment, pay it off in full. Now you have to make sure it says clearing bank account here. You don't want to put it through the operating because it didn't actually— this whole transaction never happened at the operating level. So save and close. I paid my bill. So now I can come over to a report and see on my balance sheet if this is accurate. So I'm going to make sure that this is set to all dates because I'm kind of putting this through in the future here in today's date. So I'm going to put all dates, run the report, take a peek at my clearing account, right? The balance should be zero. So there's the $3,000 in, the $3,000 out. That's perfect. Come down to The loan to officer, it should show that now the company owes the officer $3,000. Wonderful. So the last step in this particular scenario would be I'm going to reconcile my clearing account. So I'm going to select the clearing account here. And you just want to reconcile just to tidy it up. Hopefully this is a one-time event for you, but perhaps it's not. And just select all. Of the transactions. Balance is zero. Finish now. That ties it all down. It's closed. The clearing account is zero, which is what you want to see after you've done a transaction like that, and you're good to go. So hopefully that was helpful to Spendtron. If that was the scenario I kind of guessed there, but if it's the correct scenario, I hope that helped. If not, write back and give us some more feedback, and I'll try to give you some more guidance. And thank you for being a part of the community, and I hope to see you back soon. Thank you. Bye now!
