If I'm the sole shareholder of a corporation and I pay an expense?

Question

for the corporation, example, I purchase a computer and I pay with my personal credit card, would I record the record this as:

Debit Equipment
Credit: Shareholder loan.

I don't think it should be debit equipment and credit A/P because it's not really an accounts payable.

Thanks.

Answer 1

from those options,, I'd think it is a loan

Answer 2

If you don't expect the company to reimburse you, the credit should be to shareholder equity or paid-in-capital in excess of par.

If it is a loan, make sure to separate it from any other loans by creating a separate account (example: Notes Payable to Shareholder) and actually draw up a note. It sounds funny, but you will sign as both the corporation (to repay) and as the owner (to be reimbursed). You can find free forms on-line if you need them. Nothing looks fishier that when an underwriter finds APs that are due to closely held companies or stockholders and they have not been clearly separated.

Answer 3

Accounts Payable typically refers to Trade Accounts Payable, or A/P through the normal course of business.

As a the sole shareholder, you're a related party, so it would make some sense to disclose that the loan is not part of normal 3rd party trade A/P.

Shareholder loan would be more appropriate.