business owners can be very unorganized so if you are the bookkeeper you have to know how to
record transactions when the owner Co mingles business and personal funds this means paying
business expenses from personal accounts if you have any questions about this topic you can leave
them in the comment section below and I'll do my best to help you and of course if you feel
the video helped you I hope you will click like and don't forget to subscribe to get updates on
new videos that come out all the time very often owners pay non-business expenses from the business
bank account now we already did this on May 19th in a previous video when we took company money
for vonda's sons dentist with cheque number 903 that we paid from the company bank account and
no matter what the money is for or whom it's going to if it's not for business and I mean
this business the one that you're keeping records of and QuickBooks Online then the
account that records this transaction is owners withdrawals so we use the right of checks window
just like we saw in a previous video and put the withdrawals account at the bottom of the screen
right there in the category field and then once we put that there we fill out the rest of the
check normally and that's how we write a check to anything except for something that relates to
this business the one that we're keeping records of now what happens when we pay a non-business
expense from a business account well the cash that we took out of the business obviously decreases
and we have more owners withdrawals if we're paying on business from a business account so
then if we do the opposite if we pay a business expense from a non business account then we have
the opposite of withdrawals we have owners capital and whatever expense or service the business used
would increase the amount we would record for that expense so let's clarify this and explain why both
of these increase when a business owner pays a business expense from a personal bank account well
personal funds are used for the business that's the same idea as giving money to the business
to help pay business expenses therefore owners capital increases the business still incurred an
expense for the service that the business used the business then has another expense that the owners
personal funds paid for and it does not matter where the money the owners money came from it
doesn't matter if the owners money came from a credit card or a personal bank account or under
the owners mattress or from the owners aunt tilly it doesn't matter if a business expense is paid
from any account or funds outside the business the account that records this transaction is owners
capital for example let's imagine on May 22nd we paid UPS $100 for a delivery today the owner paid
cash from the owners personal pocket not company petty cash or company bank cash on hand or company
bank account the owner's personal pocket paid a business delivery for vonda's business the
company itself has delivery expense because the delivery service was for the company not for
vonda the individual or her family basically it means vonda invested another hundred into
the business so there are two ways to enter this type of transaction either from a journal entry
or from the quickbooks online register window now i'm going to show you what the journal entry
would look like but if you've been following the course along you probably already know what to do
and i'm not going to save it because i would like to also show it to you how you could record it in
the owners capital register window it would be the same result as recording it as a journal entry but
if you record it as a transfer it may be easier to track with the other personal funds so we're
talking about May 22nd $100 delivery today paid in cash from the owners pocket let's go ahead
and record it to make this new transaction we click new go over to journal entry and
we already learned how to make journal entries and you probably already figured out in this
transaction what would be debit and what would be credit well we know that the expense that we
used is debit because we always debit an expense when we have that expense and in this K it was
delivery expense and the delivery was from UPS so we can put the name of the vendor a customer here
and that helps us keep track of it and that'll be helpful later now the amount of delivery expense
was $100 now we know that if one account is debit the other account is credit and that would be
vonda's capital or vonda's capital investment and it's under the category of equity and QuickBooks
knows that would be $100 credit and we remember capital is on the credit side and we will credit
it to make it increase so this is what the journal entry would look like excuse me except for you
would have to put it as 2017 but I'm not going to save this this is what we could do but instead I'm
going to close this without saving it I was just trying to show you what it would look like because
I think you should also have the option of being able to record this in the owners capital register
window so we would go to vonda's capital in the chart of accounts like we learn accounting chart
of accounts scroll down to vonda's capital and then we would click the register now here in the
register it already shows the prior transactions that we had and we could either add it as a
journal entry which is the same exact thing we did a minute ago except fitting it into these fields
this way instead of the way it looked in the other window or a transfer notice the fields really
didn't change we are still limited to what we're physically able to put in let me just move it over
a tiny bit now let's leave it as a transfer because you can see the results would be the
same I just want to clarify that if you're in the owner's equity window the only difference between
recording and as a transfer and recording it as a journal entry if you choose journal entry you have
the option of putting any other account you want in the chart of accounts as the other account that
goes with the vonda's capital in this transaction you could choose any other account from the list
however if you record it as a transfer you are more limited to the accounts that you can choose
from when you do this so we have no choice but to record it as a journal entry because
the account that's going up is delivery expense and delivery expense will not show up here if
we use add transfer we would have to leave it as a journal entry and payee is UPS and the account
we know is delivery expense which is somewhere in the chart of accounts delivery expense there
it is and of course now here's the question which register are we in we're in the capital register
so in the capital register is capital increasing or decreasing if vonda pays a business expense
from personal the answer is capital is increasing you will almost never use the decrease column
if it's the capital account increase by $100 what does that mean it means delivery expense
will also increase and don't forget to put the correct date in this case which is May 22nd and
click Save now we can look at the trial balance and we can see vonda's Capital increased if we
double click and take a look we can see we have another journal entry from May 22nd increasing it
by $100 and if we look at delivery expense in the trial balance you can go down to delivery expense
well that increased by this hundred dollar journal entry that we just made on May 22nd
you