How do I record a loan from a company that has the same directors as the company receiving the loan? I have read a reply on the internet which suggests using Notes Receivable and Notes Payable, is this right or should it be a loan account (earlier reply on here)? In which case should the receiving company add it as a debit?
Hi Phil,
It should be loan account in both companies. To record the journal it as follows:
In the company lending the funds
Debit inter company debtor loan account X
Credit bank X
In the company receiving the loan:
Debit bank X
Credit intercompany creditor loan account X
This assume they count as inter related companies.
I hope that helps.
Kind regards,
Chris
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Many thanks for your help, Chris.