[Question] Company Debts paid by Shareholder

[Ola]

Hi All,

So when a Shareholder sells a personal asset, and uses the funds to settle company debts (in cash), how do I record the transaction(s)?

Can I simply enter a petty cash receipt of the total amount of debts paid, using the shareholder's loan account, and from there post petty cash payments to the relevant creditors?

[Andromeda]

Yes. In the end the trade creditor has been debited and the shareholder credited.