sole proprietorship with respect to my PERSONAL books?

[jcard21 xxxxxxx]

On Thu, Feb 14, 2013 at 1:19 PM, Paul Elliott
<pelliott at blackpatchpanel.com> wrote:
>
> OK, Say it's a lawn-mowing business, when it started, all its
> accounts had $0 in them. But the business had to buy a lawnmower,
> but there was not initially any money in the business accounts
> to buy a lawnmower. So X dollars was initially moved from personal
> accounts to business accounts. Then later a check could be written
> on those business accounts to buy a lawn mower. And a separate purchase
> of gasoline on the business's debit card.
>
> On the business's books, one side of the transaction was the business
> bank account, but the other side was "Opening Balances" under Equity.
> I get all that.
>
> But on the personal books, the X dollars that disappeared from
> personal bank accounts to fund the business, what is the "other side"
> of that transaction? This one of my questions.
>
> Later, the business accounts have accumulated a great deal of money.
> Because of a lot of lawn-mowing.  More than enough to buy gas, or
> repair the lawn mower.
>
> But the personal accounts are low and the owner wanted to take his
> girl friend out on a date. It was anticipation of this situation and
> others like it that caused the lawn mowing business to be started in
> the first place.
>
> So Y dollars got transferred from lawn-mowing business to personal accounts.
> That way, when the owner used his personal debit card to pay for the date
> the bank did not complain.
>
> On the books of the business, one side of the transaction was a lawn-mowing
> business bank account and the "other side" was owner draw.
>
> But on the owner's personal books, one side of the transaction was a
> personal bank account, but the other side was WHAT? This is my other
> question.
>
> All of the time that the owner was lawn-mowing, he was thinking about
> his girl friend and how the date would go. I am afraid the owners thought's
> were not very logical. But even though the owner was not logical, he
> did the transfer anyway. He said, correctly, "it is all my money".
>
> It is only the possibility of illogical dates, that kept the lawnmower
> moving.
>
> This is a very common situation. There are many sole proprietorships.
> There must be standard answers for my questions.

Paul, there are standard answers in a general sense, but they may be
incorrect in you specific business case.

You are going to have thousands (no exaggeration) of these types of
questions ...

I don't know your background, but you should really take an accounting
course specifically geared towards small businesses.

That said, ...

For your example: BUSINESS lawn mowing company paying PERSONAL you,

PERSONAL BOOKS: double-entry transaction:
Asset:BankAccount ... $xxxx
and
Either: Expenses, Income, Liabilities, or Equity : $xxxx.

Which do you think it is? One of these is the obvious correct answer.

--
jcard21