Directors Loan Account

Coolie Registered Posts: 4 New contributor 🐸
Hi I need some help if you can.
My Wife was the bookkeeper she had been doing bookkeeping for over 24 years she worked with sage and excel and ran her own business and a joint business with me unfortunately passed away at the beginning of this year.

We have a business lone from a bank and the bank takes its money once a month
We have Journal entries for this bank lone 2300 lone interest 7903

Under probate I have to pay my wife’s Debts so I have paid from my personal Bank Account xxxx amount to pay her half of the joint business loan

Now I won’t to setup on sage 50 a Directors Lone Account on Nominal 1225

And use Nominal 1101 Sundry Debtors as 1101 Directors Loan Debtors
And use Nominal 2101 Sundry Creditors as 2101 Directors Loan Creditors

So to put the xxxx amount in on receipt
1225 date ref N/C 2101 Details to pay off some of loan Net xxxx T9

Then to pay the xxxx out to the bank loan on payment
1225 date ref N/C 1101 or 2300 Details repayment of part loan Net xxxx T9
2300 is the bank loan which one should I use?

To pay some of the xxxx back to me do transfer money from 1200 into 1225
And then help lol

I am sorry but this dose go on a bit

I am not a bookkeeper I can use sage for most things just need a little help

Thank You



  • Coolie
    Coolie Registered Posts: 4 New contributor 🐸
    I Guess this is right Then :ohmy:
    or no one hear knows anything about sage 50.:mad2:
    I Would like your help but its ok will look else where :ohmy:
  • coojee
    coojee Registered Posts: 794
    I'm not entirely clear on what you're saying but I'll give you the postings if you're doing what I think you're doing. My understanding is that you are paying the bank loan personally. I'm assuming that the bank is still taking the money from the business bank account but that there's insufficient money in the account, is that correct? So the entries that are already happening are:

    DR Bank Loan with the capital (account 2300)
    DR Loan Interest with the interest (account 7901)
    CR Bank with the total payment

    If all you;re now doing is putting money into the business bank account to cover the payment then you only need to do:

    DR Bank account
    CR Directors Loan Account (I'd use a code in the 3000's) assuming you are a director and that it's a limited company not a partnership in which case it needs to go to capital

    There are several things confusing me, if it's a limited company then the business should be the one liable for the debt not you personally. However, if when you took out the loan you agreed to cover it personally then I'm not sure a directors loan account is the right way to go. You'd need to speak to someone with more experience and who knows your circumstances in more detail.
  • coojee
    coojee Registered Posts: 794
    Also the fact that you asked what to do when the business repays you, if there's money to repay you then why do you need to put money in to cover the repayment? Sorry, I've probably mis understood something in your original post
  • Coolie
    Coolie Registered Posts: 4 New contributor 🐸
    I Have not set up a Directors Loan Account

    Have a Loan with a bank in joint names

    have to pay half of loan off which i have done already from my personal bank account

    the business is not Ltd

    at some point the business will be able to pay me back well one hopes

    thank you for your help
  • Gem7321
    Gem7321 MAAT, AAT Licensed Accountant Posts: 1,438
    Firstly, I am sorry to hear of your wife's passing.

    If the business is not ltd. then you are not a director and cannot have a directors loan account. I am not sure what the nominal codes are in sage but if you haven't got any for 'drawings/capital' then rename the directors loan account nominal to 'capital introduced'. Enter the payment that you have made as Dr Loan (2300) and Cr Capital Introduced. This amount will then show in your proprietors account as a credit in the accounts.

    Continue to enter the repayments as normal.
  • Coolie
    Coolie Registered Posts: 4 New contributor 🐸
    Thank You Gem
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