I am a newly formed sole trader and all the business ins and outs are handled in the current account in QF. To assist with some initial costs, I have received some cash from a family member which I want to record in the books. It is only a small amount and really can’t be classed as injection of equity/capital. It’s more of a donation. I would welcome suggestions on what postings to make in the system.
If it is not a loan then it is classed as capital injection regardless it is your personal money or from family member as you are not partnership neither charity.
So would the entries be:
Dr current account (1200) [increase of asset account]
Cr Prop or partner drawings (3100) [increase of capital account] ?
You don’t need to journal this, you can just enter a ‘money out’ sum on the proprietor drawings account and tag it as a transfer to the current account.
Enter money in transaction from your main bank account or cash account, then tag it as “some thing else not on list” then pick code Capital Introduced for Sole Traders
As per my second post, double entry bookkeeping says Dr bank, Cr capital. I agree with accountant and that’s how I planned to handle it. There was never any intention to journal it as the money will not be in the prop’s drawing account in the first place. It’s going into my ‘real’ high street (Natwest) account so I will raise a money IN transaction in QF then tag it to 3100 with a description of capital introduced etc. Will that be ok?
yes that is fine. Book it as capital