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Linda1643
March 7, 2023
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How to record prepaid loan interest Reserve paid to our company

  • March 7, 2023
  • 2 replies
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Example - Our company, Company A, loaned $100,000 to Company B.  Company B overpaid a principal and interest payment to us by an extra $20,000, and I have to put the overage amount into a QB account for "Reserve" prepaid interest.  I have QB Desktop Pro Plus 2023.  Do I create a liability account called "Prepaid Interest Reserve - Company B", and when it's time to use up some of that prepaid interest, debit that liability account and credit Interest Income?

 

Thanks - Linda

Best answer by JessT

Thank you for taking the time to post today, Linda!

 

Yes, the reserved money is more likely to be tracked with a liability account. However, I cannot confirm that, so I suggest seeking advice from an accounting professional to ensure your books are correct.

 

About using up the reserved money, you can record a journal entry, and yes, debit the liability account and credit your income account. It's also a good idea to monitor the liability account balance in the Chart of Accounts as you create transactions.

 

Speaking of loans, I want to include this article with steps for tracking company loans (your company) for your future reference: Manually track loans in QuickBooks Desktop.

 

I'm just right here to continue helping you. Take care and have a good one!

2 replies

JessT
JessTAnswer
March 7, 2023

Thank you for taking the time to post today, Linda!

 

Yes, the reserved money is more likely to be tracked with a liability account. However, I cannot confirm that, so I suggest seeking advice from an accounting professional to ensure your books are correct.

 

About using up the reserved money, you can record a journal entry, and yes, debit the liability account and credit your income account. It's also a good idea to monitor the liability account balance in the Chart of Accounts as you create transactions.

 

Speaking of loans, I want to include this article with steps for tracking company loans (your company) for your future reference: Manually track loans in QuickBooks Desktop.

 

I'm just right here to continue helping you. Take care and have a good one!

    L
    Linda1643Author
    March 7, 2023

    THANK YOU!!!

      A
      Archie_B
      March 7, 2023

      Hi there, Linda1643.

       

      In behalf of my colleague @JessT, you're welcome. Please don't hesitate to reach us again if you need anything or have other QuickBooks Desktop concerns. We'll do our best to help you out. Enjoy your day!

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