I would like to know whether the inventory of Pvt Ltd company that is residential building built on the land acquired by the company in this case could be transferred to it's directors against the unsecured loans provided by the directors to the company for its working capital requirements. The company has not paid any interest on the unsecured loan and now not in position to payback the loan and it's interest. If yes then what is the procedure to perform the transfer and what would be the accounting entries for the same.
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Transfer of the inventory of a company to it's director
Replies (1)
1. firstly identify the net amount payable to the director. (including Interest).
Interest on directors loan Dr. < amount of Interest>
To Loan from director
2. Company can settle the loan amount with any asset. in your case is inventory( stock)
Loan from director a/c Dr. < sale value>
To sales
3. Entry for settlement - after adjustment with sale value, balance amount weather it is receivable from director or payable to director.
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