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M
MattyA
February 28, 2019
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Best way to enter a loan payment?

  • February 28, 2019
  • 1 reply
  • 0 views

I have a loan set up as a balance sheet account in QBO. I will make an electronic payment to this loan periodically. Should I do it as a "transfer" or as a "journal entry"? I don't need to record the interest with the payment so it could be a transfer (interest is billed and paid separately from principal payments). Thanks!

    Best answer by john-pero

    Transfer or JE? Neither and never. Transfers are between same type accounts, mostly bank to bank. You are paying a liability from an asset. JE will just mess you up when all you want to do is record a check.

     

    Use Write Check for payment against principal (the COA account) and post interest as a charge. To properly do this the easiest a loan of this type should be set up as a credit card type and enter the interest as cc charge. Otherwise you will want to post a zero sum Expense that offsets charged interest to principal 

    1 reply

    john-pero
    john-peroAnswer
    February 28, 2019

    Transfer or JE? Neither and never. Transfers are between same type accounts, mostly bank to bank. You are paying a liability from an asset. JE will just mess you up when all you want to do is record a check.

     

    Use Write Check for payment against principal (the COA account) and post interest as a charge. To properly do this the easiest a loan of this type should be set up as a credit card type and enter the interest as cc charge. Otherwise you will want to post a zero sum Expense that offsets charged interest to principal 

      M
      Mugs
      January 14, 2020

      I have set up an account for a loan.  When I write out a check for a payment for this loan - instead of entering it as a minus, it adds my payment to the loan.  How can I correct this?

      J
      JonpriL
      January 14, 2020

      Hello @Mugs,

       

      Let's make sure you have selected your liability and expense account as the line item of your check so it will post a payment into your loan account.

      1. Go to the Plus icon.
      2. Under Vendor, select Check.
      3. On the Category section, select your liability account and expense account.
      4. Enter the amount.
      5. Click Save and close.

      Here's an article you can read to learn more about how you can manage your loan and payment: Make a loan payment in QuickBooks Online.

       

      I've also included this helpful article for more insights about managing your loan: Set up a loan in QuickBooks Online.

       

      Keep me posted in the comment section down below if you have any other questions. I'll be always around ready to lend a helping hand.

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