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Posted by R. C. White on March 1, 2007, 10:26 am
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Hi, Melvin.
Good advice. I concur.
I would just like to emphasize to Sharif that when Friend buys dinner on
your card, you do NOT charge that to "Dining Out". For your own accounting
purposes, it does not matter what Friend spent the money for. It matters
only that he owes you for that amount of money. You do not want to inflate
your own expense categories temporarily, and then reduce them when (if) you
get repaid. If Friend forgets to repay you, then you have a Bad Debt
expense, not a larger Dining Out expense. Also, by using the receivables
account, as Melvin advises, you won't forget about the debt and you won't
have to comb through your expense categories to find how much Friend owes
you. And it will be easy to handle multiple advances and partial
repayments.
RC
--
R. C. White, CPA
San Marcos, TX
(Retired. No longer licensed to practice public accounting.)
rc@grandecom.net
Microsoft Windows MVP
(Currently running Vista Ultimate x64)
> Well here's the way I'd do it...
>
> 1. Create an Asset account called Receivables.
> 2. When you pay a bill for your friend, record it as a Charge to your
> credit card account and specify "[Receivables]" for the Category/Transfer
> field. This will record the $ amount paid as a transfer to the
> Receivables account.
> 3. When friend reimburses you, record it as an amount "Received" in your
> Cash account and specify "[Receivables]" as the account from which the
> money was transferred from.
>
> The square braces [ ] specify a transfer to/from the account specified
> within the braces.
>
> Basically you increase your receivables when you pay the bill for the
> other person and you decrease it when you receive their payment. When
> things are nominal, the balance of your Receivables account is $0.00.
>
> Instead of having a generic "Receivables" account, you could create
> specific accounts for each of your "clients", as another poster mentioned,
> and have pinpoint accuracy on their current indebtedness. I don't like to
> do that because it causes clutter.
>
> You might also wish to teach them basic financial principles and get them
> to take care of their own affairs - it would be a gift that would last a
> lifetime...
>
>>I frequently have a friend or my brother who asks me to pay their
>> bills with my credit card. They give me cash money and I pay it for
>> them using my credit card most of the time because they forget to mail
>> out their payments lol.
>>
>> I was wondering, what would be the best way for me to track this in
>> Quicken?
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