Sometimes the owner of a business agrees that a percentage of certain expenses may be charged to him. This is usually when the owner uses the telephone or motor vehicle for business and private use.

During the course of the financial year or accounting period, the expenses will be debited to the expense accounts in the normal manner.

At the end of the financial year, the particular expenses will be calculated according to the agreed formula and the owners’ portion will be debited to the drawings account and the expense account will be credited.

To Identify and Calculate Private Expenses:

Identify the Private Expense - For example, the pre-adjustment trial balance reflects petrol expenses of 5000. It has been agreed with the owner that 20% of petrol expenses is private and 80% is for business. At the end of the year, (on 28/29 February), the 20% petrol expenses needs to be calculated and must be disallowed to the Drawings account.

- The expense of 500 needs to be disallowed to the Capital Account.

To Adjust or Disallow Private Expenses:

1. Click on the Batch Entry icon, or click on the Input→Batch Entry menu option.
   - Keyboard Access: Press the F2 key on your keyboard. Alternatively, you may press the Alt+I+B keys on your keyboard.
   The Batch Type Selection screen will be displayed.
2. Select the General Journal.
3. Click on the Open button. The Batch Entry Transaction screen for the General Journal will be displayed.
   - If the correct contra account is not displayed on the Batch Type Selection screen, or if you have not yet set the batch up; or if your requirements should change, click on the F10: Setup icon, or press the F10 key on your keyboard.
   - It is recommended that the Amount Entry field be set to allow both (debit and credit).
4. Enter the transaction in the batch. After entering the transactions in the general journal, the transactions are as follows:
   
   - Since no Tax is applicable to these transactions, you may select to hide the tax column, Exclusive and Inclusive icons, as well as the lookup facility in the Setup Options for the General Journal, as in this example.
   - It is not necessary to balance the batch, if you have entered debit transactions for the same amount as for credit transactions, the net total of all transactions (debits minus credits) and the reference total for the entire batch (journal) should be zero.
5. Click on the F9: Process icon, or press the F9 key on your keyboard, to change the alias.
   - This will help you if you wish to identify a specific batch to generate a batch type report, or if you wish to export posted batches to a file.
6. Click on the F8: List icon, or press the F8 key on your keyboard, to list the batch.
   - It is a good idea to list the batch, and check the entries on the batch thoroughly. If there are any errors, you may edit the batch before posting it.
7. Click on the F6: Post icon, or press the F6 key on your keyboard, to post (update) the batch to the ledger.

After posting the transactions the T-Account View of the transactions should reflect as follows:

1. Income Statement Accounts:
   
2. Balance Sheet Accounts:
   
   

The actual amount of the particular expense account on the pre-adjustment trial balance less the amount of the calculated private expenses.

The expenses are decreased (credited) and drawings account is increased (debited).

- Debits - Capital = Credits - Expenses


— digidan 2006/11/03 07:00