Q:  Sometimes stock or one off goods are purchased on the credit card of my partner, then the money for the sale is inputted into the business account, then the amount credited on my partners account is then repaid from out account how do we account for this?

A: There are a couple of different ways of doing this. One simple way is to simply ignore the first payment by credit card totally and just record the bill as being paid by the cheque that you use to reimburse your partner, as if you were paying it straight to the supplier. This way is simple but usually not possible if you are reimbursing the partner for several bills at a time.

 

The correct way of recording this sort of transaction is to record the purchase as normal, but when recording the payment, record it as being paid from the “Loan to/from ……(your partners name) account. Every so often have a look at the balance in the Loan to from ……account (you can see this for instance by looking in the Balance sheet). This will tell you how much the business owes your partner. Then simply write him a cheque to reimburse him. This will then return the balance in the account back to 0.00 – (you can check this by looking in the balance sheet again). This second method is not only more correct but it also keeps track of how much is owed to each of you simply and effectively.