Your shareholder has debits and credits a little confused.  Obviously he doesn't know that debits are on the window side of the room.  You on the other hand have a firm handle on which side of the room the debits and credits are.  Kinda hard to convert income into an expense but it was a nice try on his part.  You also might want to point out to him that he has tax free money coming to himself if he pays back the loan to himself.