Cash paid out by owner

[ladyrider]

I am working for a small business and the owner frequently pays out of pocket for not only parts but also office supplies and meals for his employees, etc. At this point just in the two months I have been doing his books for him I have recorded expenses of a little over 12 K. I debit expense and credit a Payable account with him being the "vendor". In talking to him just now I asked him when he wanted to have me start paying him a little at a time each week or month to pay him back and clear the payable. He said he doesn't intend to be paid back and would take it off at the end of the year when he takes his books to his tax guy.

My question is this - how would that work? I know what to do to clear a receivable but how would I do that to clear the payable without causing it to be income to him? It's already an expense so what kind of impact would this have at the end of the year?

Thank you

 

[M2 Worldwide]

New way to go about paying him back!

Some companies have turned to using prepaid cards instead of cash, and are also using them to issue payroll. You could set up a prepaid card for him that you would load cash on that way you could keep track of his expenses. When you pay him to clear the payable you could just load the funds onto the card directly and they would be available instantly. You could even use the card at the end of the year when he does go to his "tax guy". Plus the card is more convenient then carrying cash and more secure. Google M2WWsolutions and you can learn about how the cards work, or just call 1-855-873-1480.