recording reimbursable expenses and split rent expenses

[Jonathan Diamond]

Hi Michael,

This does make sense. Thank you for your explanations and suggestions.

Jonathan


> On Feb 16, 2015, at 5:38 PM, Michael Hendry <hendry.michael at gmail.com> wrote:
> 
> 
>> On 16 Feb 2015, at 21:03, Jonathan Diamond <samuel.diamond at me.com> wrote:
>> 
>> Hi Michael,
>> 
>> Thanks for your insight. I've mocked up the transaction and it seems to look right. Could you kindly help me understand the rationale for posting "Fred's" rent as a liability? I'm having trouble understanding this because It's not really money I owe Fred.
>> 
>> Thanks!
>> 
>> Jonathan  
> 
> You accepted a liability to pay Fred’s Rent when you took Fred’s money, and will no longer be liable (i.e. the balance in the account will be zero) when you’ve paid the landlord for both of you.
> 
> Would it be easier to understand if the liability account were called “Liability:Advance Rent Money Received From Fred”?
> 
> In the situation you describe, the money paid by your flatmate will be passed on to the landlord in the next week or so, but if Fred were going abroad for six months, he might give you six month’s rent in advance - you would then have a larger liability, which would be gradually diminished month by month. In deciding how much money you can spend on other things, you have to consider the state of your liabilities (such as credit cards and Fred’s Rent) as well as your bank balance.
> 
> Michael
> 
> PS I’ve cc-ed the list, as there may be others with the same query, or others with better answers!
> 
>> 
>> 
>> 
>>> On Feb 15, 2015, at 12:35 PM, Michael Hendry <hendry.michael at gmail.com> wrote:
>>> 
>>> 
>>>> On 15 Feb 2015, at 13:51, Jonathan Diamond <samuel.diamond at me.com> wrote:
>>>> 
>>>> Hi Michael,
>>>> 
>>>> Thank you for your thoughtful response. If you have a moment, could you kindly clarify two points for me as referenced below:
>>>> 
>>>>> On Feb 15, 2015, at 4:06 AM, Michael Hendry <hendry.michael at gmail.com> wrote:
>>>>> 
>>>>> 
>>>>>> On 14 Feb 2015, at 22:06, Jonathan Diamond <samuel.diamond at me.com> wrote:
>>>>>> 
>>>>>> Hello, I am new to gnucash and I am just getting the hang of it. I have two separate questions that I hope you can answer for me. 
>>>>>> 
>>>>>> 1. I work for a company and often incur expenses such as meals or office supplies for example that will be reimbursed to me at the end of the month. I am having trouble determining how to record these reimbursable expenses in gnucash as well as the reimbursement itself. 
>>>>>> 
>>>>>>    a) Are the reimbursable expenses recorded as expenses that accrue in an account called “business expenses” for example? And then when I receive a cheque from my company at the end of the month for these expenses, I simply take money from the “business expense” expense account and transfer it back to my checking account for the amount of the reimbursed cheque? This seems okay, but it doesn’t account for the cheque from my company deposited into my checking account.
>>>>>> 
>>>>>>    b) Similar to a) but set up an asset account called “monies owed” for example because the reimbursable expenses I incur are technically monies i’m entitled to and therefore could be considered an asset.
>>>>> 
>>>>> 
>>>>> First the disclaimer - I’m not an accountant, just an amateur bookkeeper.
>>>>> 
>>>>> I would treat these expenses by posting them to a new account called (for example) "Assets:Reimbursable Expenses”. When the reimbursement cheque arrives, the balance in the account will drop to zero.
>>>> 
>>>> 
>>>> Does the balance drop to zero because I have simply decreased the monies from the Assets:Reimbursable Expenses and increased the monies in my checking account where the reimbursement cheque was deposited?
>>> 
>>> Precisely.
>>> 
>>> If you receive a pay-cheque from your employer and pay it into your bank, your double-entry is between the bank account and an income account - say Income:Net Salary.
>>> 
>>> If it’s reimbursement for out of pocket expenses, the double-entry is between the bank account and Assets:Reimbursable Expenses.
>>> 
>>>> 
>>>> 
>>>>> I use this method to follow Pet Insurance claims. I pay the vet up front and reclaim the costs periodically, taking account of the excess payable once per year for each medical condition.
>>>>> 
>>>>>> 
>>>>>> 2. My roommate pays for half my monthly rent. He transfers money to me before I pay rent and then I pay the total of the rent. I want to keep track of my rent expense but the money I receive from my roommate isn’t income nor is the total I pay indicative of my total expense, it’s simply money that flows through my account to my landlord. How do I account for this accurately?
>>>>> 
>>>>> This is the converse of the above. Create a Liability Account called (e.g.) Liability:Fred’s Rent. When Fred gives you his rent money you increase the Liability, when you pay the rent half the money comes from Liability:Fred’s Rent and the other half from your own Expenses:Rent account.
>>>> 
>>>> Is this done through a split transaction? The total rent will be paid by my landlord depositing a post dated cheque I wrote for the full amount.
>>> 
>>> That’s right. If you paid the rent as two cheques for half the amount each, it would be more obvious what’s going on - one cheque is posted to your Expenses:Rent account and the other to Liability:Fred’s Rent.
>>> 
>>>> 
>>>> 
>>>> Thank you for your insight!
>>> 
>>> No problem. 
>>> 
>>> I see that Mike Novack has commented that this is a bookkeeping question, not an issue specifically for GnuCash.
>>> 
>>>> 
>>>>> I think you’d probably worked this out yourself…
>>>>> 
>>>>> Michael
>>>>> 
>>>>>> 
>>>>>> Thank you kindly for any help you can provide me.
>>>>>> 
>>>>>> Kind regards, 
>>>>>> Jonathan 
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