Discussion:Line Of Equity Transactions
From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.
From TaxAlmanac
Discussion Forum Index --> Accounting Questions --> Line Of Equity Transactions
| 8 September 2008 | |
| Help! I have a client that used her Line Of Equity to place cash into her startup, business checking account. She debited cash for 57000 and credited line of equity for 57000. The first 2 statements( for her line of equity) of $266 she paid out of her personal checking account instead of her business checking account.What are the debits/credits for those 2 personal transactions. Thank You. | |
| 9 September 2008 | |
| Is the line of credit a personal line or a business line? If the business is repaying the debt, it should really be on the businesses books and therefore is not truly equity. I would have the shareholder book $10 into the equity accounts, and move the $56,990 into liability as a debt.
If you are simply going to reimburse the SH, cr the business account for the check cut to her, then dr an expense account. The problem is that if you dr an expense acct (interest expense for example), is it truly all interest expense or does a portion represent return of principle? It would be easier to track and disclose the LOC if it were recorded as a liability. | |
| 9 September 2008 | |
| It is Personal Line Of Equity. Also, it is a sole proprietorship. Am I correct in the below transations for the 2 personal checking account transactions?:
Debit Interest Expense Debit Return Of Capital Credit Owner's Loan Owner's Loan would be Other Current Liability Thank You | |
| 9 September 2008 | |
| Yes, the remaining upaid portion of the LOC would be a liability. If you are trying to keep it technical, the current or long-term classification would be dependent upon the maturity terms of the LOC. If less then 12 months, then current. If greater than 12 months, then long-term. | |
To join in on this discussion, you must first
log in.
