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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16544
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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I am trying to straighten out the books to a Hookah Lounge

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I am trying to straighten out the books to a Hookah Lounge categorized as an LLC. I am new at accounting and was wondering the best way to catergorize expenses that were made for personal gain by the owner. Basically the owner used the business account to make all personal purchases for the year. What is the best way to hanle this?
Thank you for your question, and thanks for using JustAnswer.com. When you have an owner use business funds for personal expenses, you will debit the owner draws account. This is an equity account, and will decrease the equity the owner has in the business.

Remember, Assets = Liabilities + Owner's Equity

When you make the entry to record the transaction, you will debit owner draws and credit cash. This decreases both equity and assets.

I hope this makes sense. Please let me know if you need any further information.

** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO RATE MY ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site*
You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.

Customer: replied 3 years ago.


That is what I was thinking too. I guess to be more specific in my question, I am using quick books an nothing seems to match owner draws under equity. Could you tell me which of the following would best suit me from image below?


Attachment: 2013-01-02_055119_1-2-2013_12-46-04_am.pdf


 

If you can't set up a new account, then Owner's equity. When you close the books, draws are closed to owner's equity anyways.

Please let me know if you need anything additional. Thanks for using JustAnswer.com and have a safe New Year

** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO RATE MY ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site*
You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.

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