Double Entry of Informal "Loan" & Repayment

[Adrien Monteleone]

Keith,

Similar to what Mike and other’s described here, I use an asset account for this.

I have an Assets > Current Assets > Reimbursements account (with sub accounts for friends and family members whom I regularly share expenses with, usually for gifts) that I use in these cases.

An example is my siblings and I get one large gift for Christmas for each parent. One person does the paying and we all pay them back. If I do the paying, I make an entry like this:

Dr. Expenses > Gifts > Christmas
Dr. Assets > Current Assets > Reimbursements > Sibling 1
Dr. Assets > Current Assets > Reimbursements > Sibling 2
Dr. Assets > Current Assets > Reimbursements > Sibling etc. (I have 5!)
	Cr. Assets > Cash

That way, over the course of time, I can see how much each sibling owes me for various gifts and track how and as they pay me back.

If one of THEM pays and I owe them for something, I’d record it like so:

Dr. Expenses > Gifts > Christmas (or whatever)
	Cr. Assets > Current Assets > Reimbursements > Sibling(whomever paid)

Sometimes, we don’t even exchange cash, I just keep track of the back and forth and we only pay up if lots of time goes by or someone asks to settle up.  I’ll also use these accounts for other one-off occasions that don’t fit other purposes. (Like, “Hey can you spot me a beer and I’ll catch you next weekend?” sort of thing)

Now, if someone gives you money in ADVANCE, that is really a liability you should balance against the monetary asset, but I like to keep everything in one place, so I’d just credit the reimbursement account rather than add the liability layer to the situation. That way, my current assets don’t change on net. I don’t mind if such accounts have a credit balance as that just gives me an at-a-glance look as to if they owe me or I owe them. (since assets are normally a debit balance when positive, if they show a credit or negative balance, that means I owe someone - technically a liability, but this keeps me from having to maintain two accounts for essentially the same function)

Regards,
Adrien


> On Jan 14, 2018, at 3:58 PM, Mike or Penny Novack <stepbystepfarm at dialup4less.com> wrote:
> 
> On 1/14/2018 1:57 PM, Keith Lewis wrote:
>> I'm new to GC, longtime Quicken user. This is a double-entry accounting question rather than a GC question-hope that's okay in this mailing list. I made a purchase for a gift w credit card and used expenses:gifts to balance. Afterwards, a friend wanted to help with the gift and so paid me half with cash. I think I should deposit that cash into assets:wallet and balance with expenses:gift. But isnt the cash from my friend income? Does this sound right to you? Now imagine my friend had offered ahead of time to help pay for the gift, but didn't immediately have the cash. I think I could record the transactions as above or set up a "loan" account to track the "loan". IOW split liability:creditcard -> expense:gifts + liability:creditcard -> loan; then when he pays me back, loan -> asset:wallet.Thanks for your time,Keith
> No, not income but an adjustment to an expense. You (later) learned that you were not paying for all of the gift but sharing the cost. So an adjustment transaction: (when he pays you)
> debit  wallet
>   credit    gift expense
>       description could explain -- say "friend is paying for half the gift"
> 
> Now let's examine the second case where the friend agreed to do this but hadn't yet. In other words, you paid for the gift but he owes you for that share of it. I am assuming that you mentioned credit card because that is HOW you paid for the gift.
> 
> when gift purchased
> debit    gift expense (for your share)
> debit    owed by friend (that is an ASSET type account)
>     credit    credit card (for the purchase price
> 
> when he pays you back that's a transfer between assets
> debit   wallet
>     credit owed by friend   (that "asset" is now zero)
> 
> Michael D Novack
> 
> 
> 
> 
> Michael D Novack
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