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


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


7 yrs experience

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78 Ans.