How do I enter loan fees which are added to a loan amount but not deposited?

[Rustler]

Let's say you borrow 1,000, and the fee is 25

 use make deposits

line one, liability account, 1,025

line two, fee expense, -25

or

journal entry

fee expense, 25 (debit)

bank deposit, 1,000 (debit)

loan current liability account 1,025 (credit)

[stevebramich]

Thanks Rustler,

Could you tell me how to enter the fee expense as an expense for tax purposes without it affecting bank account balances? I tried to enter it as an expense to an undeposited funds account which I created as a Current Asset account but got an error message when I tried to save it.

[Rustler]

My entries posted it to an expense account

sorry I can not help with your VAT tax system, I am in Texas