How to record in the books

[cientax]

New client C-Corp with three shareholders. How do you record these transactions in the books.

One shareholder manages the operating checking account and the others handle the other checking accounts for payroll and taxes. This is a commercial roofing company. The one that handles the operating account will sometimes write checks to one of the other shareholders in their name, they then cash the check and buy job materials and pay for them in cash. They bring in the receipts and the cancelled checks are returned by the bank once cleared, but the receipts don't always total to the amount the check was written for and no monies are refunded to the checking acct.

They will also sometimes write checks to a relative (nonshareholder & nonemployee) to go buy materials and pay cash for the materials and again the company is not reimbursed for any left over monies.

How would you record these checks in the books? As job materials? As owner's draw? As petty cash?

I'm at a loss, Can anyone help. Thanks.

[Wayne Brasch]

New client C-Corp with three shareholders. How do you record these transactions in the books.

One shareholder manages the operating checking account and the others handle the other checking accounts for payroll and taxes. This is a commercial roofing company. The one that handles the operating account will sometimes write checks to one of the other shareholders in their name, they then cash the check and buy job materials and pay for them in cash. They bring in the receipts and the cancelled checks are returned by the bank once cleared, but the receipts don't always total to the amount the check was written for and no monies are refunded to the checking acct.

They will also sometimes write checks to a relative (nonshareholder & nonemployee) to go buy materials and pay cash for the materials and again the company is not reimbursed for any left over monies.

How would you record these checks in the books? As job materials? As owner's draw? As petty cash?

I'm at a loss, Can anyone help. Thanks.

cientax,

This company is not using a good system of internal control. Consequently, many "funny" things could be going on with the company money. I would record those checks to an Accounts Receivable in the name of the shareholders and relatives involved. This would make each of them responsible for returning the money not spent for materials.

Wayne

[kcjenkins]

New client C-Corp with three shareholders.

How would you record these checks in the books? As job materials? As owner's draw? As petty cash?

I'm at a loss, Can anyone help. Thanks.

First, there is no such thing as 'owner's draw' in a corporation. I'd show it as an advance to employees, when it is given to an employee, and I would tell them not to write checks to non-employees for this purpose. If they must, write it to the employee, and let him cash it, and be responsible for turning in receipts. Any amount not accounted for with a receipt is considered income to that employee at the end of each month [or quarter, at the latest].

When you get a receipt, then you debit job materials and credit employee advances.

[OldJack]

I assume you have been hired to do the bookkeeping. I would talk to the owners explaining the problem and state that if a better system could not be worked out to properly account for monies and documents that they should hire someone else. You should not be in a position of "fudging" their accounting records to accommodate their lack of proper procedures.