Reimbursing and journalizing mileage expense.


I was wondering how a owner of a business reimburses for mileage in the name of the business

Is it
Debit: Mileage expense
Credit: Cash


Is it
Debit: Mileage expense
Credit: Accounts Payable

Thanks for your help.

Could be either one, sort of. If they’re actually paying money, they have to credit cash. If they’re just processing the expense form, they’ll credit a payable account, probably “Reimbursements Payable,” but I think it could be “Payroll” for a small firm. Not “Accounts Payable” though.

ETA: They’ll credit cash and debit the payable account when they issue checks.

I get different checks for mileage and regular pay, if that helps.

I wouldn’t imagine chalking it up to Payroll.

Payroll has all kinds of implications… Taxable income for the employee; subject to FICA and what-not other taxes; stuff like that.

It’s just a reimbursement. Otherwise, what nametag said I would think.

Taxes and other withholding are not calculated from the balance of the payroll account; each employee needs to have a separate account for that (preferably in a separate ledger). Small, privately held firms are not obligated to follow any particular rules of bookkeeping or accounting, as long as the books are honest and accurate, and as long as the figures required for, say, accurate payment of business taxes can be extracted from them. Simplified bookkeeping using a minimum of accounts is often easier for such a company, though it may make a real accountant pull his hair out.