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Journal entries

NickynooNickynoo Feels At HomeRegistered Posts: 34
Hi anyone that can help,

I have always sruggle to get my head around this can someone please clarify or shed some light:

I understand that journal entries are normal done with corrections of errors and with things like recording on wages?

I am doing the accounts and have checked what has previously been done and just do not understand it,

Why would a journal debit be done to record the owner taking money from the business is this not simply a payment from the bank to the owner?

I am using sage?

Thanks nicky

Comments

  • jenny3549jenny3549 Trusted Regular Registered Posts: 472
    Nickynoo wrote: »
    Hi anyone that can help,

    I have always sruggle to get my head around this can someone please clarify or shed some light:

    I understand that journal entries are normal done with corrections of errors and with things like recording on wages?

    I am doing the accounts and have checked what has previously been done and just do not understand it,

    Why would a journal debit be done to record the owner taking money from the business is this not simply a payment from the bank to the owner?

    I am using sage?

    Thanks nicky

    Hi Nicky,

    While it is a payment from the bank, it isn't a supplier payment since it's money going to the owner. Therefore, to record the transaction on Sage, you would chose the Bank Payment icon next to Supplier Payment in the bank window. This then records the transaction as cr bank dr DLA (if ltd company) or Drawings if Sole Trader etc.

    The Bank Payment option is used for everything that isn't a straightforward supplier payment. So, for example, you would have journal entries showing for things like: payment of insurance, loan repayments etc. You don't do them like journal entries (ie in the nominal ledger window) but they still show up as though you had.

    Hope that helps.
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