How to account for business expenses paid out of personal account?

ProSmartConsulting

I am new to wave and also to my business. I have incurred some business expenses that i have paid out of my personal funds. Now i have added these individual expenses into wave accounting transactions and associated to a personal account in lieu of my business checking account. Now to balance my books, how do i make an entry to get reimbursed from my business account to the personal account?

eliteacchk

You paid for these company's expenses out of your own pocket so in essence you are lending funds to the company. The best way is to create a temp loan entries (some also refer this as a shareholder's or director's current account, assuming yours is a limited corporation) to lodge the expense but also to mark it as a reimbursement due to you (which is a balance sheet entry), and when the company repays you, the amount will be set off, so the accounting is like this example:

To lodge the expense and to record that it is due to you...
-- Dr. Entertainment (a PnL item)
----- Cr. Director's current account (a balance sheet account)

When the company repays you...
-- Dr, Director's current account
----- Cr. Bank or cash account

But then of course there is a "shortcut" by creating a Journal Entry directly to record the final result:
-- Dr. Entertainment
----- Cr. Bank account (which pays the amount to you)

For instructions on creating the director's current account, please refer to:
https://community.waveapps.com/discussion/2907/directors-loan-for-limited-company