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LisaAmazon
August 24, 2023
Question

Repayment of Loan with Reimbursed Expenses

  • August 24, 2023
  • 1 reply
  • 0 views

I have a client with a loan on the books. Sometimes, he pays it off with cash from his checking account and sometimes he incurs expenses on behalf of the loaner, to pay it off. I can't create a journal entry to credit the loan because it doubles the expense amount.

How do I account for these expenses against the loan?

Thanks,

Lisa J.

1 reply

Rainflurry
Rainflurry
August 25, 2023

@LisaAmazon 

 

If your client is paying expenses on behalf of the lender, then they are not your client's expenses, they are the lender's expenses.  Therefore, you don't want the expense showing for your client at all.  Let me know if I'm missing something there.

 

If that's the case, then you can just assign the payment to the loan, not an expense account and make a note in the memo field on the bill.  Or, you can create a bill with an expense account, pay it, and then create a journal entry to reduce the loan balance and remove the expense: debit loan payable, credit the expense account from the bill.  

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