Skip to main content
S
Suarez-L
February 26, 2021
Question

Line of Credit in QuickBooks desktop

  • February 26, 2021
  • 1 reply
  • 0 views

I hope someone can help me here in understanding the LOC in QB desktop(pro premier 2019). We have a LOC, which we use to transfer funds  into our checking account as needed.  What is the process to balancing the LOC to match our bank statement? When we pay to the LOC, we were creating a bill but just found yesterday that I could just use the transfer funds. My LOC is totally off from what I show on the bank statement. I haven't been reconciling the LOC.  Could I be missing a transaction? The ending balance is way , way higher in QB compared to what I have on the bank statement. So, if I have the bank statement that shows the principal and interest , how would I record that in QB? I hope this makes sense, I am so confused and would appreciate if anyone can help . Thank you ! 

1 reply

Jen_D
Jen_D
February 26, 2021

Thanks for posting here, @Suarez-L,

 

The process of recording Line of Credit in QuickBooks can be confusing, but once you get a hang of it, then it should be easy for you. I want you to know that I’m happy to explain anything in more detail so you're guided properly.

 

For the first step, we need to create the Line of Credit account in the COA. Here's how:

 

  1. Go to Lists menu then Chart of Accounts.
  2. Right-click anywhere then press New.
  3. Choose Loan then Continue. If you don't see this option, pick Other Account Types then Other Current Liability
  4. Press Continue to proceed.
  5. Enter the details of your LOC then press Save and Close.

 

Regarding the process of how you record and which transactions to create depends on how you use the line of credit for. If you use the LOC to put money into your account, use the Transfer Funds or Make Deposits option to increase the bank balance.

 

If you're paying the LOC, you can simple write checks from the Banking menu. To do that, follow the steps below:

 

  1. Go to the Banking menu then Write Checks.
  2. For the Pay to the Order of field, enter or add an LOC vendor.
  3. Add the interest and the principal or the LOC account we created earlier (Loan or Other Current Liability).
  4. After putting the amount Save and Close.

 

When you use the LOC to purchase something, you can use journal entries or other expense transactions in QuickBooks. Then when you pay, use a check so it's easier to record and trace the payment.

 

By following this, you should be able to match and balance the entries in the register.

 

If you have any questions about the steps or the process, just reply to this thread and it will come right back to me. Have a good one!

    S
    Suarez-LAuthor
    February 26, 2021

    @Jen_D Thank you so much for your quick response ! I truly appreciate it :) As you can see I am a newbie and II am so glad to have found this community. I'm such a newbie. Let me tell you my  situation, we have a LOC set up already and we use to transfer money to our checking acct. When we pay the LOC, I have been creating a Bill. I didn't know about the "transfer funds". Currently our  LOC in QB shows a totally different amount than what I show in our bank statement. So is my " ending balance" in QB for the LOC, supposed to match my bank LOC account? 

     

    I am so lost.  

    DivinaMercy_N
    DivinaMercy_N
    February 26, 2021

    Yes, @Suarez-L.

     

    In terms of reconciling your Bank account and LOC, it should match each period of reconciliation to make sure that your reporting and books are accurate. Here's how to reconcile your account:

    1. Review your opening balance, this should match your real-life bank account.
    2. Once done, go to the Banking menu and select Reconcile.
    3. From the Account field, choose the bank or credit card account you want to reconcile.
    4. The Statement Date is automatically filled in. Usually, it's 30 or 31 days after the statement date of the previous reconciliation. Change it as needed to match your bank statement.
    5. Then, QuickBooks also automatically enters the Beginning Balance. Ensure it matches the beginning balance on your bank statement. If it doesn't, here's how to fix your beginning balance.
    6. Enter the ending balance, in the Ending Balance field.
    7. Input the amounts of the Service Charge and Interest Earned. If your bank statement shows a service charge or interest that you have not yet entered. Don't enter charges you've already added.
    8. Check the fields. If all data are correct, tap Continue to start reconciling.

    For your reference, see our Reconciliation guide page. 

     

    Also, it is recommended to always create a backup copy of your company file before making any changes. This is to make sure you have an original copy that you can restore at any time in case of data loss or damage.

     

    Then, to review your past reconciliations, you can pull up the Previous Reconciliation report. 

     

    Let me know by posting a comment below if you need further assistance in managing your accounts in QuickBooks. I'm always here to help. Have a good one. 

    Terms & ConditionsAccessibility statement