Problem: How
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can you reconcile the Supplier Payable Account with
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the Shareholder’s account?
Solution:
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One of the entity's owners paid the Supplier directly on behalf of the company. This amount should be recorded under the Capital Issued section of the Balance Sheet, therefore utilize Mutual Settlement and Other Income documents to address this issue, as
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demonstrated below
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1. To write off Payable Balance, create Mutual Settlement document with Transaction Type Supplier Debt Adjustment.
Select relevant Income GL account in Account field:
See also 7.5.10.5.1. Creating a Mutual Settlement document. The Main tab
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2. At Accounts Payable tab, select the payable document from this Supplier (please use Pick options to select outstanding invoices):
See also 7.5.10.5.2. Creating a Mutual Settlement document. The Accounts Payable tab
Mutual Settlement creates the following transaction:
Dr Current Trade Payables
Cr Other Operating Income
3. Create Other Income document with Transaction type Reversal to adjust Income with Shareholder's account:
To accurately reflect the payment made by the owner on behalf of the company, follow these steps:
Record the Shareholder’s Contribution:
- Credit Side: Add the Shareholder's Account
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- under the Capital Issued
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- section in the Balance Sheet.
- Shareholder: Ensure the Shareholder is set up as a company within your accounting system.
- Contract in Dimensions: Assign the appropriate contract dimension to the Shareholder.
Adjust the Income GL Account:
- Debit Side: Add the same Income General Ledger (GL) Account that was used in the Mutual Settlement.
Other Income document creates the following transaction:
Dr. Other Operating Income
Cr Capital issued (Owner 1)
Thank you for being a FirstBIT customer! # pay from owner account