In instances where a shareholders has borrowed from the company and the loan is to be paid back via the shareholders distribution you will need to process the transactions as follows.
The Dividends - Contributories section of the F5602 / 5603 will need to be manually edited because the transactions have not been processed via Shareholders Distribution.
1. Create a Pre-Appointment debt for the loan amount for each shareholder
Financials-> Assets-> Add Asset-> Accounts Receivable (Pre-Appointment)
2. Repay the loan
There are two scenarios.
a). Repay a shareholders loan in full (applies to both In Specie and Cash Distribution)
Prepare a journal as follows:
DR Equity: <name of share class account> for total of in specie/cash dividend for the shareholder (no allocation to shareholder)
CR Accounts Receivable (pre-appointment) - Allocate this line to the pre-appointment invoice (being the amount of the dividend which is also the amount of the loan)
b). Repay a shareholders loan via a Cash Distribution where only part of the cash is used to repay the loan
Prepare a payment:
DR Equity: <Name of share class account> - for total of dividend
CR Accounts receivable (pre-appointment) - Allocate this line to the pre-appointment invoice
CR Bank - for cash component they will receive. (this amount will calculate automatically as the net of the previous two line items.
In this example the shareholder distribution for ordinary shares is $100. The shareholder needs to repay a loan of $50 and so will receive a distribution payment of $50.