On Thu, Feb 25, 2010 at 11:43 AM, Hugh Esco <[email protected]> wrote: > In the Operating Agreement for a newly formed company it speaks of the > initial capital contribution of the founding partners. That investment > was made in a combination of cash and sweat equity. The Agreement > later includes a provision providing for a 'Set Price' meant to > monetize that initial capital investment. > > My question relates to how this set price ought to be "memorialized and > made a part of the LLC records" as required. I'm guessing that I want > to create a GL entry. I understand how to balance the 'Common Shares' > account with the 'Checking Account' as a GL entry. But I'm wondering > how it is I make a balanced GL entry giving credit in Common Shares for > the unpaid sweat equity invested in the start-up.
Ok. I am not a CPA, but this seems like a fairly straight-forward question to me. In a small firm, I would skip the common shares bit for the main principles and create separate equity accounts for them. In a large firm, you would have to hit a single account (common shares). Either way you are going to have three accounts involved: 1) Asset/Checking account (debit cash contribution) 2) Asset/Contributed labor account (debited agreed commitment) 3) Equity/capital account (credited total contribution) When the contributed labor is used as agreed, you can credit it against a different equity account (called a drawing account). The drawing account would be manually closed (and zeroed) at year-end but the capital account (tracking contributed equity) would not. Hope this helps. Best Wishes, Chris Travers ------------------------------------------------------------------------------ Download Intel® Parallel Studio Eval Try the new software tools for yourself. Speed compiling, find bugs proactively, and fine-tune applications for parallel performance. See why Intel Parallel Studio got high marks during beta. http://p.sf.net/sfu/intel-sw-dev _______________________________________________ Ledger-smb-users mailing list [email protected] https://lists.sourceforge.net/lists/listinfo/ledger-smb-users
