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steven-maus87-gm
November 16, 2023
Question

Loan-term loan repayment

  • November 16, 2023
  • 1 reply
  • 0 views

I'm recording a 2 year loan that we're paying back. I've followed the steps here:  https://quickbooks.intuit.com/learn-support/en-us/help-article/loans/set-loan-quickbooks-online/L7pMR6rUN_US_en_US?uid=loywn1ae

 

When I first create the account it generates a negative opening equity balance. When I record payments on the loan, should I be doing so in a way that increases the equity as it decreases the liability? How should I do that?

1 reply

Rainflurry
Rainflurry
November 16, 2023

@steven-maus87-gm 

 

If you assigned an opening balance to the loan liability account when you set it up, then your bank account  must be short the loan amount in cash.   

 

When you set up a loan liability account in QB, you don't want to assign an opening balance to it.  You want to create a deposit and assign your loan liability account to the deposit.  Or, you can also create a journal entry - debit your bank account, credit loan liability.  Both will increase you bank account and loan liability by the same amount.  Then, when you make payments, assign the principal portion to the loan liability account and the interest portion to interest expense.  That will reduce your loan balance by the principal amount of each payment.

 

   

K
KimberlyS
November 16, 2023

It's an honor to have you here, Steven.

 

I can add information about setting up a loan and recording a payment in QuickBooks Online.

 

As Rainflurry has mentioned, if you don't want to add an opening balance to your liability account, you can create a deposit or journal entry to increase the amount. Otherwise, you can add an opening balance to keep the record accurate.

 

Moreover, you can proceed to the steps below once you're ready to record a loan payment:

       

  1. Please make sure to switch to the Accountant view.
  2. Select + New on the left pane, then select Check.
  3. If you plan to send an actual check, add a check number. Also, you can enter Debit or EFT in the Check no. field for direct withdrawal or EFT.

          

After that, enter the following in the Category details section:

 

  1. Choose the liability account for the loan on the Category dropdown, then enter the amount.
  2. For the interest, pick the expense account from the Category dropdown and enter the amount.
  3. You can also add any additional fees on additional lines. Please ensure to select the appropriate accounts from the Category dropdown.
  4. Review all the details, then select Save and close.

 

To help you further with your liability account, I recommend seeking advice from your accountant. You can visit this website if you don't have one yet: Find a QuickBooks ProAdvisor.

 

On the other hand, you might consider scanning this material to learn more about connecting bank and credit card accounts to acquire transactions automatically: Connect bank and credit card accounts to QuickBooks Online.

 

Please don't hesitate to update us here in the Community for additional questions when setting up a loan with QuickBooks Online. We're always here to lend a hand.

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