Handling Purchase Advances

[Sanjay Chakravarty]

Thanks to everyone for the great inputs. I will use a liability account to
record these transactions.

Regards
Sanjay

-----Original Message-----
From: Cat P [mailto:barking at gmx.com] 
Sent: 20 June 2013 17:26
To: Buddha Buck
Cc: Sanjay Chakravarty; GnuCash Users List
Subject: Re: Handling Purchase Advances

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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