[Question] Sole Trader on Pastel - question on Journal entries

[TraceyVN]

My question is - how does one allocate for expenses (percentage allowed/calculated) which is allowed to be claimed - such as interest on bond, bond payments, cleaning expenses etc., when it is for a sole trader who is using a portion of his home to run the business.

We have a separate bank account for the company. So if one was to do a journal entry - which you need to have a DR and CR - what contra account would be used? You cannot use your bank, as this was not paid from the company's bank. The items would be classed as expenses but not sure how to do the journal entry.

Thank you

[Neville Bailey]

Hi Tracey,

I would set up a Loan Account for the owner in the balance sheet.

Any expenses that the owner incurs on behalf of the business will be debited to the relevant expense account and credited to the Loan Account, using a general journal.

Is the business VAT registered? If it is, then there are a few tricks that need to be employed so that the system does not get the output and input tax confused when using the above general journal.