Home – New Forums Tech talk Xero experts, plz help. Reply To: Xero experts, plz help.

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LaurenL, post: 81446 wrote:

In your particular case, using manual journal is more appropriate than expenses claim option in Xero for you to reimburse your business associated costs that used from your personal accounts.

In principle or by rule, the source document, invoice transaction date must match General Journal date, period. As your business account was not existed while all the transactions took place, money paid for the purchases was borrowed from somewhere (your personal account) not your business account.

Open up a new account called “Loan” account under the category of Liability in Xero (Settings /Charts of Accounts/Add Account); create a manual journal for each transaction in the system – Adviser/Manual Journal. In the Narration section, put the comments like ‘business expense paid by personal account’ or whatever you feel right, date is the day of the transaction took place. Debt expense account and credit loan account. The total amount under Loan account from the GJ entries is the amount you will be reimbursed from your business bank account later.

When you withdraw the loan amount from your business account, you need to Debit Loan account and Credit your business bank account dated the day the transaction took place so that it won’t affect your bank reconciliations.

If you purchased the machine at the last day of last financial year 30 June 2010, you need to record the transaction on that day in order to represent the true and fair value of your accounts. You may need to unlock the period (if you have done the tax return for the last financial year, you need to talk to your accountant regarding the changes and she/he will adjust your accounts accordingly when your current financial year tax return is being lodged), record the transaction by debt Machine and credit Accounts Payable/Cash dated 30 June 2010. You also need to record one day of depreciation amount using ATO approved depreciation rate. The carrying amount of the fixed asset (the difference between the cost of the machine and accumulated depreciation of the machine. In your case, the depreciation amount equals accumulated depreciation amount as it was only one day for the last financial year) can be depreciated each month from this financial year onwards until the carrying amount of the asset becomes zero or it is being disposed whichever comes earlier.

Kind regards,