How do you account for a private investors loan to your company?

ANSWER

Expert Thomas Graham iii's Answer:

For a complete answer I would need more information about the loan particulars. (Such as asset given (cash or equipment), terms, etc.)

More than likely we would just be talking about a cash loan that a lender would grant. In this case the business would record the following journal entry.

Cash                                                              X

Short-term/Long-term note payable                                     X

This would record the liability on the books of the company. I would then assume that the company would have at least yearly liabilities that would be due. The journal entries for those would be as follows

Short-term/Long term note payable              X

Cash                                                                                     X

This would record a payment on the note payable.

Thomas Graham iii, CPA, CFE

Oklahoma

7 yrs experience

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78 Ans.