now we will learn how to record transactions where the owner makes
a cash investment or a cash withdrawal these types of transactions are when
the owner Cole mingles the business funds with his or her personal funds
investment means the owner deposits money into the business bank account from a non business
bank account very simply put the owner puts money into the business on the other side withdrawals
means the owner takes money from the business bank account for a non-business reason simply
put the owner takes money out of the business when we record either of these two transactions
we have to have an account in the chart of accounts to record them in for a transaction
that is an investment we have to have an account in the chart of accounts called capital the type
of account this is is equity when we record money being taken out of the company we have
to have an account in the chart of app accounts called withdrawals that's the name that we're
going to give the account and the account type again is equity you should probably study the
first two or three chapters of introduction to accounting to understand what the word equity
means in this context and to learn about these two accounts but from the bookkeepers point of
view just use these accounts when we record the transaction from the main menu click list chart
of accounts in the bottom left click account new when the new account window opens up choose
equity as the account type you can read about equity type of accounts over here in this field
we click continue and leave the account type chosen as equity then type in the word hold in
capital then click Save and new the account type equity is still in the account type and we type
the next account hold ends with drawls then we click Save and close now we have the two
accounts and the chart of accounts that we need to record the owner investing or withdrawing cash
to or from the company bank account now let's imagine on April 9 Holden wrote cheque number
205 from the company bank account to Verizon for fixing his child's phone clearly this was
a check for non-business reasons therefore the account that records this check is not telephone
expense the account that records this check is withdrawals just for good practice let's
record this check in the register window from the main menu click banking use register then
in the use register pop-up click OK now we open the cash and bank account in the register window
at the bottom of the register window we will record this new check click the calendar box
and go back to April 9 and put the date of this check click in the number field and hope that
QuickBooks remembers we're up to check 2:05 if 205 did not automatically come up on your screen
remove what's there and put check number 205 now when we click the payee we choose Verizon but look
what happens when we click on the name Verizon QuickBooks automatically puts telephone expense
as the account for this check we must change this to Holden's withdrawals this is not telephone
expense for the company this is a personal expense for Holden it does not count as a company expense
so we put Holden withdrawals the payment amount is $1,000 and we push tab now at the bottom of
your register window click record notice the balance of the bank account went down but if
we open the trial balance you can see that for the very first time Holden's withdrawals showed
up on the trial balance for $1000 the amount of this check now what about this transaction on
April 10 Holden took an ATM cash withdrawal from the company bank account to repair the
foundation of his house $2,000 the ATM slip had the number nine eight seven six five four three
as the unique transaction identification number this is obviously not for business and therefore
we will again use the withdrawals account let's record this one in the writer checks window from
the main menu click banking write a check the date of this transaction is April 10 and because this
is not really a check we don't want a check number here we want the unique transaction identification
number in this case it was on the ATM slip number nine eight seven six five four three now we put
the money amount as two thousand and as discussed we go down to the bottom and we put the account
as holdings withdrawals now we're almost finished you could leave the payee field blank but instead
it would be better to click the pull down list and you could add Holden's name on the fly which
means you add the name at the minute you record the transaction so let's click add new and tell
QuickBooks Holden is not a vendor customer or employee click other and we will put the owner's
name on the other name list click OK and just type in his first name in this case Holden then click
OK again you could leave it blank but it's nice to put the owner's name on the other name list
when we click Save and close we can open the trial balance and see that holdings withdrawals has now
increased to 3 thousand dollars by the way the other name list is located here list other name
list only Holden's name is currently on this list but this would be the list of names that you would
have for anyone who is not a customer vendor or employee now let's look at two investment
transactions first on April 11 Holden took cash from his personal savings and put it into the
company bank account two thousand dollars and the deposit slip was number three six nine one two one
five let's record this in the register window from the main menu click banking use register
then click OK the register window opens up and at the bottom of the register window we record
the transaction and we first put the date April 11th the deposit slip number is three six nine
one two one five now there is no payee and you could leave this field blank but it's nice to
put in the owner's name so that you know who's responsible for this transaction in this case
he is investing money into the business so the account we choose is Holden's capital we put the
money amount in the deposit column and we type in 2000 and push tab now we have all the information
we need for this deposit we click record and if we bring forward the trial balance we now
notice that Holden's capital shows up on the trial balance for the first time as $2000 if
we look again at the bottom of the register to the transaction that we already recorded we can
double click here on the word deposit and we can see that this is the way the transaction would
look if we recorded it into this window the make deposits window so you could open up this window
put in Holdens capital put in $2000 in the memo field you could put the deposit slip number if
you wanted to and this exact transaction could have been recorded here and then when we open
the register window we would have seen it looks the same here let's do one more investment just
to see how this would work let's imagine on April 12 Holden took more cash from his personal savings
and put it into the company bank account this time $5,000 deposit slip number six one seven
one eight one nine one this is not from customers and therefore we will use the capital account
from the main menu click banking make deposit notice the payment window opens in front of
the deposit window and in this case we can just close it out so we put the date of the
deposit which is April 12th received from Holden and the account is Holden's capital
Holden's capital and of course put the payment amount of $5,000 that's it that's all you have
to do click Save and close and when we open the trial balance we can see Holden's capital
has increased to $7,000 if you look at the bottom of the register window you can see
that both of these transactions look the same in the register window and when we click the
word deposit we go back to the window that we just had open to record this deposit