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I am doing double-entry bookkeeping with GnuCash to track my personal finances.

Sometimes I spent money on expenses which my employer is supposed to spent, and I later get reimbursed. For example, I might need to go on a business trip or visit a conference, and I pay the flight, hotel, conference attendance fees with my private credit card. A few months later I get the money back from my employer as part of my salary.

I am unclear how to reflect both the laying out of the money, as well as being paid back, correctly in my double-entry bookkeeping.

For example, I just paid conference attendance fees from my credit card. I made an asset "Money owed to me by my employer", and book the transaction as a credit in the credit card account (type: credit card), and as a debit in the "Money owed to me by my employer" (type: asset) account. Is this the correct way to do it?

In one or two months my salary will be higher exactly by the amount I have spent (I don't get interest). How do I book this correctly?

1 Answers1

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When you pay the flight, hotel, conference attendance fees of $100:

                                        DR      CR
Accounts receivable: Employer Name      100
    Liability: Credit Card                      100

When you repay the credit card debt of $100:

                                        DR      CR
Liability: Credit Card                  100
    Asset: Bank                                 100

When you receive the gross salary of $5000:

                                        DR      CR
Asset: Bank                             5000
    Accounts receivable: Employer Name          100
    Income: Salary                              4900

Your final balance sheet will show:

Asset
    Bank                                4900

Your final income statement will show:

Income
    Salary                              4900

Under this method, your "Salary" account will show the salary net of business expense. The drawback is that the $4900 does not agree with your official documentation. For tax reporting purposes, you report $5000 to the tax agency, and if possible, report the $100 as Unreimbursed Employee Expenses (you weren't officially reimbursed). For more details see IRS Publication 529.

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