Business Manager
I want to know how I would do a journal entry for the owner of a self proprietor business that has withdrawn funds from his personal account and deposited into them to a U.S. account to pay bills.
The U.S. account shows a deposit (transfer) from the Canadian personal account. The account funds are then withdrawn from the U.S. cross border account for the payment of bills.
Do I use his shareholder loan or do I expense it to the bills. It is paying them, they are actually a U.S. draft. I am so confused how to enter this.
Okay, first off take a deep breath, then handle each step of the transactions one piece at a time.
(1) Enter all the bills into your Accounts Payable module (Enter Bills in QuickBooks) in the correct currency ... i.e. in US dollars if the bill is in US dollars and in Canadian dollars if the bill is in Canadian dollars.
(2) Create a U.S. bank account in your current assets ... if the U.S. account was opened as a business account only. Don't create this account if the account opened was personal. I'm going to assume it was opened as a business account.
(3) Record the deposit to the U.S bank account as DR US Bank (Current Asset); CR Owner's Contribution (Equity Account).
(4) Pay the bills through your Accounts Payable module (Pay Bills in QuickBooks) with your payment source as the U.S. Bank Account.
(5) Reconcile your U.S. bank account just like you would your Canadian bank account.
If you are using QuickBooks, all entries are recorded through the appropriate forms. Do not use the general journal entry form.
Of course, it goes without saying that your software needs to be able to handle multiple currency. It is possible to record these transactions without the multiple currency option, but it sounds like you don't have the experience to do so.
Hope this helps. Good luck!
P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.
Return to Ask a Bookkeeping Question.