Skip to main content
S
stevieaw9
January 10, 2024
Question

Our bank gave us an increase to our line of credit, how do i apply this to our LOC account?

  • January 10, 2024
  • 1 reply
  • 0 views

I'm new to our company's QBO role. I've tried using the Bank Deposit link to add the money to our account but I'm having trouble getting the numbers to come out correctly. I'm able to transfer the money into our checking/operating account but that leaves the LOC account in the negative. The LOC account is saved under Bank Accounts and the tax form section as Savings. What am i doing wrong?

1 reply

MariaSoledadG
MariaSoledadG
January 10, 2024

I'll guide you on how you can apply this to your LOC account, Stev.

But first, let's set up the line of credit in QuickBooks Online (QBO) to track liabilities and expenses. To set up a liability account for the principal, follow the steps below:

1. Go to the Gear ⚙ icon, then select Chart of accounts.
2. Select New.
3. From the Save account under dropdown, select Other Current Liabilities.
4. From the Tax form section dropdown, select Line of Credit.
5. Enter a name in the Account name field.
6. Click Save.

 

Once done, if you incur interest charges, record your paid interest in your expense account. Here's how:

1. Go to the Gear ⚙ icon, then select Chart of accounts.
2. Select New.
3. From the Save account under dropdown, select Expenses.
4. From the Tax form section dropdown, select Interest Paid.
5. Enter a name in the Account name field.
6. Click Save.

 

After you've set up the two accounts, track the transaction in your line of credit. You can make a transfer to put the credit funds into our LOC account. To transfer funds, see the process below:

1.Click + New.
2. Select Transfer.
3. From the Transfer Funds From dropdown list, select the bank account that the money is coming from.
4. From the Transfer Funds To dropdown list, select the bank account that the money is going to.
5. In the Transfer Amount field, enter the amount being transferred.
6. Edit the Date field.
7. Enter a description of the transfer in the Memo field (optional).
8. Click Save and close or Save and new to complete the transfer.
9. Hit Yes if you double-checked the date.

You can refer to this article for more detailed steps when tracking your line of credit: Manage A Line Of Credit In QuickBooks Online.

Additionally, learn how QuickBooks add and match transactions that are downloaded in QuickBooks. For your reference, consider checking out this article: Categorize Online Bank Transactions In QuickBooks Online.

We're here to make sure we'll be able to address all your concerns about your line of credit. As always, you can reply to your comment if you need further assistance.

    S
    stevieaw9Author
    January 10, 2024

    That's great but the issue I'm running into is I'm not able to add funds to my LOC account without it coming from a bank count within my Quicksbook account.

     

    How do I add funds to my LOC account without it going negative?

     

    I've made a transfer from my LOC account into my operating account to match the balance from my actual bank account. In turn, the money transferred has caused my LOC account to be negative.

    R
    RCV
    January 11, 2024

    Thanks for coming back, stevieaw9.

     

    We can create a journal entry transaction that will increase the LOC account. Before creating, let's make sure we delete the transfer entry you've created in QuickBooks. Just go to the Chart of accounts list, locate the account, and select View register. Then, select the transaction and click Delete.

     

    As always, since all businesses are unique, you may wish to reach out to your accountant for additional guidance to ensure the account you need to apply when recording the transaction. Here's how:

     

    1. Click the + New Plus icon. 
    2. Select Journal entry.
    3. On the first line, select an account from the Account field. Depending on if you need to debit or credit the account, enter the amount in the correct column.
    4. On the next line, select the other account you're moving money to or from. Depending on if you entered a debit or credit on the first line, enter the same amount in the opposite column.
    5. Check the amounts - you should have the same amount in the Credit column on one line and the Debit column on the other. This means the accounts are in balance.
    6. Enter information in the memo section so you know why you made the journal entry.
    7. Press Save and new or Save and close.

     

     For more tips and other resources, you can always visit our website for future reference: Self-help articles.

     

    I'd love to know how this process goes. I'd appreciate any details that you can add. If you have further questions about managing your bank transactions in QBO, feel free to get back to this thread. I'm always ready to lend a hand. Keep safe and take care. 

      Terms & ConditionsAccessibility statement