Handling Asset purchased by company director with his own money

classic Classic list List threaded Threaded
1 message Options
Reply | Threaded
Open this post in threaded view
|

Handling Asset purchased by company director with his own money

Arwan
Hi,

I would like to confirm or get a better solution for a situation where  a director goes and purchases an asset for the company and pays with their own money.

In the chart of accounts, there is a liability account 2430 LOANS FROM DIRECTORS
this account is used to book transactions where  directors spend there own money on behalf of the company. So the amount a director spends reflects as a loan from the director.

There is a supplier named GENERAL that is used to book transactions with different suppliers who are not needed to be created as individual suppliers as they are only one-time suppliers.

For a situation where a director has gone and purchased a car for the company and paid with their own money, this is how am handling it now:

1.   go to MAIN-MENU → ASSET MANAGER  → ADD A NEW ASSET and enter the purchased cars details

2. go to MAIN-MENU → PAYABLES → SELECT SUPPLIER → ENTER SUPPLIER INVOICE and click on the FIXED ASSET button, select the car from dropdown list and enter the cost then BACK TO INVOICE ENTRY, then complete the invoice entry for the supplier named GENERAL.

3.  go to  MAIN-MENU → GENERAL LEDGER → JOURNAL ENTRY and enter the following journal for the cost of the car.

DEBIT    –  A/c 2100 ACCOUNTS PAYABLE
CREDIT –  A/c 2430 LOANS FROM DIRECTORS

4. go to  MAIN-MENU → PAYABLES → SELECT SUPPLIER → ENTER A SUPPLIERS CREDIT NOTE for the supplier named GENERAL for the cost of the car. This is to remove the cost of the car from that supplier.

Is this a correct way to do it ? Is there a better way ?

Thanks in advance.

Arwan
WebTech Resources
Nairobi Kenya
+254 724659244
Email  :info@weberp.co.ke  
WEB  :weberp.co.ke