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MBM29
Aug 21, 2019 7:58 PM UTC
Solved

How do I set up and track a line of credit

I am using Quickbooks Desktop Pro 2017.  How do I set up a line of credit.  We will be transferring money from a line of credit into our bank account to be paid out as needed.  I have searched online for this answer but can only find how to set this up using the online version of quickbooks which does not help me.

CGarmanAnswer
Aug 21, 2019 8:39 PM UTC

Go to your Chart of Accounts, click the drop-down for Account in the bottom left and choose New. Select the radio button for Loan when asked to choose the account type. Click Continue. Give your account a good name (i.e. First Bank LOC), add Optional items if necessary then click Save & Close. There are a few ways you can record the LOC in your books but the easiest may be with a journal entry. Go to Company, Make General Journal Entries. Enter the date the LOC was deposited into your bank account. Debit your bank account and Credit the LOC account for the total amount. Then, in the future, as you make payments on the LOC, you will book the expense from your bank account (I assume) to the LOC account. 

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16 replies

CGarmanAnswer
Aug 21, 2019 8:39 PM UTC

Go to your Chart of Accounts, click the drop-down for Account in the bottom left and choose New. Select the radio button for Loan when asked to choose the account type. Click Continue. Give your account a good name (i.e. First Bank LOC), add Optional items if necessary then click Save & Close. There are a few ways you can record the LOC in your books but the easiest may be with a journal entry. Go to Company, Make General Journal Entries. Enter the date the LOC was deposited into your bank account. Debit your bank account and Credit the LOC account for the total amount. Then, in the future, as you make payments on the LOC, you will book the expense from your bank account (I assume) to the LOC account. 

    MBM29Author
    Aug 22, 2019 12:36 PM UTC

    Thanks for the information.  When making payments back to the loan account how would I track the interest?  Do I need to set up an interest account for the LOC and make an entry there as well?

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