We are a company limited by guarantee and have a large number of members. Each member has provided a loan to enable us to start our operations. Obviously, the loans are a liability and we have the cash in our bank account but how do I enter these individual loans into our accounts?
I believe you could show this in a similar way to a Directors Loan Account, you could make a new account for “Members Loans” so that you can see it on the Balance Sheet.
As long as the transaction descriptions are distinct enough and show the members details then you would be able to do a search to see how much each member is owed.
The only thing with this is that you wouldnt be able to run a report to show how much each member is owed.
Thanks Beth. The problem with this suggested solution is that the funds are already in our bank account. When we create a member loan account, which is treated as a bank account, then the cash is counted as an additional asset in the balance sheet, so we are double counting the cash asset we have.
How do I avoid this?
You would show it as a transaction from the loan account into the current account so the loan account would show as a negative balance
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