How many of you partners or owners of a company at the lack of liquidity have had to make contributions to it? Gazelle
In Circle, we recognize that the vast majority of you, so we did not want to miss the opportunity provided by this blog, to explain the accounting treatment of these contributions:
The General Accounting Plan, we define the account 118. Contributions of partners or owners
as "those elements of capital provided by shareholders or owners of the company when acting as such, in connection with transactions not described in other accounts. That is, if they do not constitute consideration for the supply of goods or the provision of services performed by the company, nor have the nature of liabilities. In particular, includes the amounts paid by the shareholders or owners for losses. "
Well, explain this: you post on this account those contributions of the partners is not considered capital, does not fit in other accounts and not a loan to the company, ie not expect any refund for the refund made.
This account is typically used for members' shares to offset losses.
can see an example, we believe it will be any clearer.
Company X, has a loss of 50,000 €, the partners decided to make an extraordinary contribution to settle these losses. accounting entry for the contribution would be:
50,000 (57) Treasury (118) Contributions from partners or owners
50,000 for compensation for loss,
50,000 (118) Contributions from partners or owners to (129) Results for the year 50,000
The contribution of the business partners can be a good solution for these difficult times we go through employers, but you have to give them the proper accounting and tax treatment.
post I hope this has been helpful and as always we challenge you to the next. A greeting ...
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