and now we will learn about when the owner invests money or assets into the company this is also
paying business expenses from personal funds it's very obvious that if the owner takes cash
from their personal bank account and deposits it into the company bank account or takes equipment
from his or her home and brings it to the office for exclusively business use those two situations
are clearly owners investment however did you know if the owner pays a business expense from
a non-business account that that also counts as owners investment this is true even if other
assets are brought from the home to be exclusively used for business what happens when you pay a
business expense from a personal account well the company received a service that they have used or
expended they need to record that expense as a legitimate business expense the owner has taken
personal funds and put it towards his business needs that's investment the investment belongs
recorded in the owners capital account with all the other investments into the business this is
true even for the owner's credit card charges or if the owner pays cash it doesn't matter how
they pay if it comes from the owners personal funds credit card cash check or bank account
it counts as owners investment and the business has a specific business expense for example let's
imagine on April 5th Holden pays five hundred dollars from his personal bank account for a
business delivery and he gives cheque number 61 the company has $500 more in delivery expense and
Holden has invested $500 more in his business he has $500 more owners equity in the company
so let's take a look at what the results should look like if we record this properly let's open
the trial balance now we know we will have more delivery expense delivery expenses starting this
fiscal quarter as 0 so if Holden pays delivery expense it doesn't matter if he pays it for
business or for personal his business received a delivery for $500 so his business should receive
should record $500 as delivery expense and $500 should show up right here after we record the
transaction properly Holden's equity which is what we're calling Holden's capital this number
represents his investment before the April 5th transaction he only invested a total of
30 thousand into the company but now that he's paying $500 of the business delivery from his
personal that means he's investing $500 more into his company and this result should show thirty
thousand five hundred dollars so how do you record that very simple we open the register for Holden's
capital or equity account and record it there all you have to do is open the chart of accounts
usually by clicking list chart of accounts and here we have Holdings equity this is his capital
account this is the account that records any time Holden invests money into the business to
open the register window for this or any account just double click on the account and the chart of
accounts and the register window for Holden's equity or you could call it Holden's capital
would open up now the format that it displays now is showing you two lines for each one transaction
because this is the way registers looked in the old days before a computer if you like you can
click the checkmark at the bottom here and make it one line per transaction I like to see it one
line per transaction even though the fields that you input are the same to me it's easier to see so
I'm going to leave this checked off but you don't have to you can enter it individually into these
fields so but it's the same thing so we click here and we go back to April 5th which is the
date that hold and paid the companies delivery expenses the check number well it was drawn from
his personal account but it's still a good idea to write down what check number it was now we don't
know whom he paid so we can leave that blank but in the future whomever he paid you put here but
the account is delivery expense delivery expense because you're in the equity register which means
this is going to go up by five hundred and so is delivery expense remember aha first of all if you
put five hundred it's always at an increase to Holden's owner's equity because he paid something
from his personal so if you pay something from personal in the equity or capital register you
put the five hundred in the increase column now the result is what we promised it would be
thirty thousand five hundred and if we look at the trial balance now we see Holden's equity is thirty
thousand five hundred and we also notice delivery expense showed up here for the first time as five
hundred dollars please note very important if you track expenses by customer or job you cannot do
it this way you must instead watch the following video to input that particular situation correctly