[Question] Processing Loans to Company on Pastel

[Raene]

Hi there

I have recently started my own company and am trying to figure out the most correct way to process the following:

I purchased items cash from a supplier, these where paid from my personal account as there were no funds in the business account as yet.

I have processed the supplier invoice in the supplier journal and I have used the expense account to which it applies as the contra account.... that was the easy part but now I still have to 1) indicate that the supplier invoice was paid and I need to 2) indicate the funds used to pay the invoice as a loan from myself (as Director) to the company so that I can get it back at some stage. As no money has come in or out the bank account, I assume that further journals need to be processed. How do I do this and what would the contra accounts be?

Basic bookkeeping I guess to most but I would truly appreciate the help.

Thank you

[Neville Bailey]

Hi Raene,

You should not have processed a supplier invoice in the first place, as the company has not purchased anything from that supplier, and the company has no liability towards that supplier.

You, in your personal capacity, have purchased goods from that supplier and you have paid the supplier personally.

If you have subsequently provided the goods for the company's use, then the company has a liability towards you.

Therefore, I would simply have processed a general journal, crediting your loan account and debiting the relevant expense account.

If there are VAT implications, then it is important that you process the credit line item of the journal first, and use the contra account column for the debit, with the VAT code of 01 in the tax column.

[Raene]

Hi Neville

I don't know what I was thinking! Thanks so much for your help.

Good thing I did not update any of those batches!

Keep well

[Raene]

I'm stumped again.... If I purchase software for business use i.e Pastel Payroll etc (to process both payroll for our staff and clients), do I post it to an expense account or to a cost of sales account (operating expense)? Thanks in advance for the advice.

[Neville Bailey]

I'm stumped again.... If I purchase software for business use i.e Pastel Payroll etc (to process both payroll for our staff and clients), do I post it to an expense account or to a cost of sales account (operating expense)? Thanks in advance for the advice.

I suppose it depends on whether you have purchased the software in order to generate income (allocate it to Cost of Sales), or to run your business (allocate it to an Expense account).

[Raene]

It would be both, so I think I will allocate it COS. Thanks again