How To Write A Check Against An Equity Account

Overview

Sometimes you may need to write a check against an equity ledger for a partner distribution or draw for example. However, when you write a check, you can only pick from expense accounts/ledgers. In order to have the check go against the equity account instead, you need to first write the check against an expense holding account/ledger and then do a journal entry to have it hit the desired equity ledger.

Creating an Expense Holding Ledger Account

If it does not already exist within your ledger you will need to create an Expense Holding Ledger account before you can proceed further.

Go to Accounting > Accounting Manager and select Ledger Accounts

• Select Account > New Account Ledger

  

Now you will need to fill in the following Ledger Account information:

• Name: “ Equity Holding Expense”

• Type: Expense

• Subtype: Expense

• Parent: NONE

• Warehouse: ALL

• Description*(optional)*: This allows you to write checks against this account as a holding spot to later transfer out into an equity ledger using a journal entry.

• Check to Enable the account.

  

Writing a Check Against the Holding Expense

Now that an expense has been created next you can write a check using this account.

Go to Accounting > Accounting Manager > Write Checks

Enter the check information and under the Expense, section add the newly created Ledger Account and the amount of the check.

Making a Journal Entry

The next step is to make a journal entry against the desired Equity Ledger Account.

Go to Accounting > Accounting Manager > Ledger Accounts.

Select the Equity Holding Expense and verify the Equity Holding Expense accounts balance is 0. Next right-click on the Account Name and select Make General Ledger Entry.

• Next, select the desired Equity account.

• Enter the same dollar amount of the check into the Debit side

• The totals at the bottom should match for each Debit and Credit

• Once verified, Save and Close.