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Post Info TOPIC: Repayment of Drawings Ex Partner


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Repayment of Drawings Ex Partner
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Hello

an ex partner has repaid a lump sum to the business ( the partner was paid too much in drawings last year in error).

How would you post this onto the books so that it is clear for the accountant?

When a cheque ( income)  bounces, I post it as negative income. I therefore considered posting a repayment of drawings as negative drawings...

 

Thanks

 



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Hi

Drawings can't have credit entries. Not sure where you intend to post the 'negative drawings' but if I were you, I'd do a 'repayment' as:
Balance sheet entries:
CR Repayment by Ex Partner (... or whatever name you choose to use.)
DR Bank

Bearing in mind that an ex partner has absolutely no connection with the current year's drawings account, you cannot put an entry relating to him/her on drawings. Leaving a descriptive name as given above makes the circumstances obvious to the accountant.



RE.... negative income:
I'm assuming your clients are barristers that are still within the initial period when cash-basis accounting rules; otherwise the only times there is negative income which I am aware of is when goods are returned/a sale is cancelled etc. Bounced cheques are entered against the bank and the debtor in accruals-basis' accounting.



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