Hello everyone. I'm new to this forum and currently studying AAT level 4.
If you guys could help me with this question, I'd appreciate it.
If the directors of a company buy items for use by the business with personal cards:
1.) How would I get this spending into the accounts in a normal double entry system? I.E. what are the correct double entries?
2.) If the company hadn't yet moved to Sage and its records were on various Excel spreadsheets (not a double entry system), what would be the best way to record these transactions for the accountants to process later.
Great forum, by the way.
Cheers.
1) You have to set up a Director's Loan account. You can set this up in Sage to function like a bank account. (Exactly how this is done is a bit fiddly and I must admit I have forgotten how I did it, but I do remember that it was quite difficult.) A suitable nominal code might be 129x.
Double entry for spending by the directors on their personal cards would be Dr Stationery, or whatever the expense is, and Cr Director's Loan.
(Amounts borrowed from the company by the directors would be the reverse - though as I am sure you are aware there are limits and rules about that.)
2) I am not quite sure I have totally understood your question in this case. I guess there would be lots of ways that this could be done, but I think they would all boil down to a list of account names to which amounts are added, so it would be a matter of noting that the money had been spent on the expense and a liability incurred of the company to the director.
I hope this answer is helpful. It is what we did. As ever, I am open to correction by the many more qualified members of this forum if I have got anything wrong above.
