Canada Question regarding Equity and expenses

[AccountinginVan]

Hi everyone,

I am currently studying for an exam and I have a question: if I am paying for a bunch of expenses through a personal bank account, instead of a business account, when I enter this in my books do I debit expense and credit equity? Is this even allowed? There is no answer for this question, and it has my friend and I stumped.

Thank you.

 

[bklynboy]

Depends. If paying through the personal to be reimbursed by the business then credit receivable. If the owner will not get reimbursed then its additional contributions to the company.

 

[AccountinginVan]

Depends. If paying through the personal to be reimbursed by the business then credit receivable. If the owner will not get reimbursed then its additional contributions to the company.

Thank you. I will try and answer both ways.

1) When you say credit receivable do you mean I book it as Dr. Office expense, Cr. Payables - John Smith?

2) Does this mean the answer could be Dr. Office expense, Cr. Owner's Equity - John Smith?

Thanks again!

 

[lyak1]

Well, if you're paying the expenses, you would credit them, not debit them. The two ways in which I can see a viable solution is either:

a)
Credit Additional Paid-in Capital