Where is kaz

Are the credit cards personal? If  he funded the business from his personal credit card and the business is a corp it owes him but he still owes the card holders. You handle the matter as a debt to him with the card simply being his financial instrument and nothing else. He owes the card. The business owes him. In liquidating the business he gets first preference over other creditors.

In any event, check with a business lawyer. Let me know which state and I will ask my friends.

I just needed to know the proper entry in QB...the other stuff is all taken care of.

Yes, the biz owes him, so the entry would be a debit to the liability (credit card) and a credit to an equity account or shareholder loan acct, if the biz can pay him back, which is doubtful

Here is a shot at the transactions. Im not sure of the legal aspects from the company's stand point 

 

Looks like the CC company will suffer a loss since Jadgeo is bankrupt.

They can however recover from the company that owes Jagdeo.

Dr Bad debt Exp

Cr   AR (due from Jagdeo)

 

Jagdeo's transactions 1 (PFS)

Dr Cash or assets

Cr Credit card payable

To use credit for cash or asset

 

Jagdeo Transaction 2 (PFS)

Dr Investment in Berbice Bridge (or Receivable)

Cr Cash  

To record Jagdeo investment in Berbice Bridge company

 

Jagdeo Transaction 2 (bankruptcy) (PFS)

DR CC Payable 

CR Investment in Berbice Bridge (or Receivable)

To write off assets and liability on Jagdeo PFS

No net assets in his name.

 

Berbice Bridge Company books

Dr Cash 

CR Paid in capaital or a (straight) payable- Jagdeo  

The CC company has first rights to the net assets (paid in capita) or the payment of the liability to satisfy the debt owed by Jagdeo.

 

Dr Paid in capital - Jagdeo

cr Liability to cc company - Jadgeo

 

Dr Liability to CC company (or Jagdeo)

Cr Cash

To record payment of debt to CC company or Jagdeo

 

 

CC Company books (short cut)

DR Cash

CR Recovery of Bad Debt

Should they collect from Jagdeo or the BB company

 

 

 

 

 

I don't know how it is in the US and Canada, but in the UK we have a system called a director's loan account. I have one as well, which allows me to lend money to the business, or borrow from the business. Personal payments that are in fact part of the company's expenditure are entered into the loan account, and visa versa. That way it is clear what is owed by who, and what was bought by me on behalf of the company, and what repayments I received or made, if any.

If you google director's loan account you should get enough info to help you settle the query.

Thanks fellas

He should be able to write off this amount as a bad  debt on his personal tax return.

personal return already taken care of by CPA...I just needed the entry to write off company's books

He has all these liabilities that's never going to be paid...I wanted some advice on the correct entry

The correct initial entry should have been dr cash and cr capital. Since it appears that the erroneous entry did not have an effect on his tax position, just go ahead and dr liabilities and cr capital.

yes, we got loan acct

cool

All you had to do is call QB support!!

Word of advise Riff.

 

You need to have  an experienced accountant as  a consultant on your payroll.

Chief lookin fo wuk fo one ah him client

QB support don't exactly go into the transactions...plus I don't trust them on such a question...I am part of the online community which answers such questions, just wanted to get some feedback here as well...learned a lot, I like broderman breaking it down from both angles

Will eventually look into partnering with one...I agree

I know accounting, but sometimes I need to know that I am doing the right thing

Riff legal liability in the USA is big businesses. As Chief stated, hook up with a certified accountant or accounting firm. Let them assume the liability.