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Owner loaning business $ for equipment purchase

tsmithtsmith Member Posts: 22

My business is purchasing a trailer. I'll be loaning the business money from my personal account, and the business will pay back over X years.

However, I don't want to use the owner invesment account, as I want to keep track of this separately.

What accounts should I make for asset and liability, and how do I record the initial transaction for the loan amount?

in Accounting Technical Support

Comments

  • MikegMikeg Member Posts: 995 ✭✭✭

    @tsmith,
    First step is to create Owner Loan as a long term liability. Next depends on which bank account the money is coming from. If the business is going to use it's own account. The deposit in the business would be categorized as Owner Loan. When the business makes the disbursement to purchase, it would be categorized as an asset i.e. Equipment. If the funds came from your account then you would make the following journal entry using the appropriate date:
    Debit Equipment 2500
    Credit Owner Loan 2500

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