Accidentally used Personal Credit Card for a non-inventory parts purchase. I meant to use my business debit card. Now my business bank statement is off.
I use the expense account "Purchase - Hardware to resell" Then the income account "Sales - Hardware" for non-inventory parts.
How do I correct this?
by paying with your personal funds, you inadvertantly made a contribution to your business. if you are a sole prop, create a new checking account called Petty Cash. Ctrl A > Ctrl N.
make a deposit into Petty Cash from an account called Owner Equity. Now write a check from Petty Cash to your vendor to cover the non-inventory parts.
If this answers your question, please click on "solved."
Hi techguy717,
When you purchase something and intend to resell it, it is not an Expense when you purchase it. Its Cost Of Goods Sold.
There is no need to create a Petty Cash Account to just do more work in data entry. As I had stated to you before, techyguy717, when you use personal funds for Business, it is Owner Investment which is an Equity Account.
Owner Investment and Owner Draw are closed at year-end to Owner Equity.
It might be a good idea to read up on Sole Proprietorship at www.irs.gov. It would be a good idea to consult with an Accountant, too.
Laura Kaniuk - LJK Bookkeeping Services
I still can't figure it out. What steps are to be taken, step by step to properly record this.
I use the expense account "Purchase - Hardware to resell" Then the income account "Sales - Hardware" for non-inventory parts.
The expense account "Purchase - Hardware to resell" is a COGS.
This is how I created the "Parts" Item.
Create a non inventory item called parts, check mark the setting that says it is used in an assembly or for resale, set the expense account to COGS and select an income account
use that item when you purchase, click in the description block and enter the specifics
use the same item when you sell, copy and paste the description
The problem is that I am getting good advice from you, but I don't know how to put in into Quickbooks Pro.
your item setup is correct for a non-inventory part.
you paid for the part with personal funds instead of business funds. the simple solution is to buy the part with business funds from the seller. in this case, YOU are the seller. write a check to Cash for the part. cash the check and you are reimbursed.
If this answers your question, please click on "solved."
