Handling Purchase Advances

[Cat P]

In fact, apologies for the mistake.

It is a liability account as I would have recorded it myself, and not
A/Receivable, of course (A/Payable at most).

Cat



On 20/06/2013 12:50, Buddha Buck wrote:
> The other folks have the right idea: record the transactions as they occur.
>  I just disagree with them as to how they should be recorded.
> 
> You are incorrect that the transactions have no impact on your finances.
>  At the end of the day, your bank account is $100 greater, and your wallet
> is $100 lesser.
> 
> Here's how I'd record them:
> 
> 1. My friend gives me $100 to buy an item.  He deposits the amount in my
> bank.
> 
> Debit $100 to Assets:Checking
> Credit $100 to Liabilities:My Friend  (or some similar liability account)
> 
> Your friend is giving you $100 in the expectation that it (or equal value)
> will be returned.  Until that is done, you owe him $100; that's a liability.
> 
> 2. I already have $100 in my wallet, so buy the item for $89 from my
> wallet.  So balance $100 is to be paid back to my friend.
> 
> Debit $89 to Liabilities:My Friend
> Credit $89 to Assets:Wallet
> 
> This recording assumes that the item immediately goes into the possession
> of your friend, and thus can cancel the debt immediately.  Practically,
> that's probably not the case, and you are holding on to the item until you
> meet your friend.  In which case, an alternative choice would be:
> 
> Debit $89 to Assets:Miscellaneous (or some other appropriate asset account)
> Credit $89 to Assets:Wallet
> 
> 3. When we meet, I return $11 in cash to him from my wallet.
> 
> Debit $11 to Liabilities: My Friend
> Credit $11 to Assets:Wallet
> 
> If you recorded the item you bought for your friend as an asset, and you
> gave it to him when you gave him the $11, that would be:
> 
> Debit $100 to Liabilities: My Friend
> Credit $89 to Assets:Miscellaneous
> Credit $11 to Assets: Wallet
> 
> If you look over the set of transactions listed above, the net result is a
> $100 debit to Assets:Checking, and a (combined) $100 credit to
> Assets:Wallet.  Every other account has balanced debits and credits, no
> income, expense, or equity accounts were involved, and Liability accounts
> were used to represent money/things you owed to others while Asset accounts
> were used to represent money/things you possessed.
> 
> 
> 
> On Thu, Jun 20, 2013 at 6:16 AM, Sanjay Chakravarty
> <sanjaychak02 at gmail.com>wrote:
> 
>> Dear All,
>>
>>
>>
>> Here is a scenario I want to record in gnucash but I don't know how.
>>
>> 1. My friend gives me $100 to buy an item. He deposits the amount in my
>> bank.
>> 2. I already have $100 in my wallet, so buy the item for $89 from my
>> wallet.
>> So balance $11 is to be paid back to my friend.
>> 3. When we meet, I return $11 in cash to him from my wallet.
>>
>> Usually I use Assets::Reimbursements when purchases are made in advance for
>> someone (like official), and I get reimbursed exact amount. Here, an
>> advance
>> is being made, and that too into the bank. How do I setup the above 3
>> transactions in gnucash?
>>
>>
>>
>> Regards
>> Sanjay
>>
>>
>>
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