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  • Apr 16, 2013, 01:14 AM
    How are capital contributions affected...
    I can't seem to find an answer (or a proper way of asking Google) this:

    If there's a company with two partners, one who has invested [x] capital, and the other who has invested sweat equity, and takes out a guaranteed payment basically in the sum of capital (and the business in question provides services, from which there is slight, increasing profit, but not remotely enough to cover expenses), then how is this tracked?

    Ie, capital contributions shouldn't change sans a partner draw, so where is the equity account that increases or decreases based on profit/loss? I'm trying to do the books correctly (at a beginner level) and understand how to balance the equation when expenses are larger than profit; the invested capital should never decrease (right?) so, how do I both track Partner's A contributions AND balance the equation? Thanks!

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