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Accounting & Bookkeeping & Small Business Forum
Accounting, Bookkeeping, Marketing, and Small Business Resource
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Guest
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| Posted: Thu Oct 28, 2004 5:40 pm Post subject: Using a Credit Loan to Start a biz |
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Hi,
First of all, I appreciate any help anyone can offer. I have received a line of Credit in the form of a Visa, for which I am going to use to start my business. ( C- Corp / electing for an S- Corp very soon ) My question is, in my bookkeeping practices how do I record the credit card transactions? Is the entire credit line a debit? What is the best practice to record these?
Thanks,
Chris |
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Guest
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| Posted: Fri Oct 29, 2004 4:48 am Post subject: RE: Using a Credit Loan to Start a biz |
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| You would only record on your books the amount that you actually pulled down from your LOC. For example if you had a $50K LOC, and pulled down $10K, you would debit CASH for $10K and credit LOC PAYABLE (a liability account) for $10K. As you spend the $10K, you would debit an EXPENSE account and credit CASH. When you made a payment on your LOC you would debit the LOC and credit CASH. In your accounting software you will need to set up a Liability account for LOC Payable. |
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Guest
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| Posted: Sat Oct 30, 2004 11:28 am Post subject: RE: Using a Credit Loan to Start a biz |
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Hi Chris,
Since your credit line is in the form of a Visa, this is how you record your transactions:
When you get your Visa bill, you will Debit (increase) the expense for each line item on your bill and Credit (increase) a current liability account named after your Visa or Bank. Then, when you pay the bill, you Debit (decrease) the liability account and Credit (decrease) your cash account.
Good luck!
April |
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