GM90
Level 1
‎March 25, 2019 09:44 AM

setting up a loan for debt with money borrowed from 2 sources

I am trying to record a loan where I borrowed money to pay a lawsuit settlement. ($200,000)

I borrowed from 2 entities, a bank ($150,000) and a family member ($50,000).   Both of these loans were checks which I deposited into my business checking to pay the lawsuit debt.  

How do I record the check for $200,000, written to the person the lawsuit monies went to...what account should be in the expenses tab?  

 

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MaryGraceS
Moderator
Moderator
‎March 25, 2019 01:00 PM

Reports and accounting

Hi there, @GM90.

 

Welcome to the Community. I'd be happy to help walk you through how to set up the loan in your QuickBooks Desktop.

 

To start, you need to create a liability account to track the loans payable. Let me guide you how:

  1. From the Lists menu, click Chart of Accounts.
  2. In the Chart of Accounts, right-click anywhere and select New.
  3. In the Add New Account screen, click the Other Account Types radio button and from the drop-down, choose either: Other Current Liability (for short-term loans payable over one year) or Long Term Liability (for long-term loans payable over a longer period).
  4. Click Continue.
  5. Enter a name and other necessary fields for the account.
  6. Click Save & Close.

After setting up the account, you can now record the loan amount. 

 

Here's how: 

  1. From the Banking menu, select Make Deposits.
  2. If the Payments to Deposit window opens, click Cancel.
  3. In the Make Deposits window:
  • In the Deposit To field, select account to deposit the loan into.
  • Check the Date and enter an optional Memo.
  • In the FROM ACCOUNT column, select the Liability account you created in Step 1.
  • In the AMOUNT column, enter the loan amount.
  • Click Save & Close.

Once done, write a check to the person where the monies went to. While we can't recommend a specific expense account to use, you may consult your accountant for advice about this to make sure your books are recorded correctly.

 

Finally, please refer to the steps below to record the loan payments. 

  1. From the Banking menu, select Write Checks.
  2. Choose the Bank Account you will use to pay the loan.
  3. In the Pay to the Order of field, select the name of the bank.
  4. Go to the Expenses tab and in the Check details area:
  5. On the first line, choose the liability account you created and enter the payment for the principal amount.
  6. On the second line, select an interest expense account and record the payment for the loan interest.        
  7. Fill out all the necessary fields.
  8. Click Save & Close.

I've attached an article below about this for additional reference: Track Loans in QuickBooks Desktop. 

 

These resources should help to get you on the right track for recording the loan amount and payments in QuickBooks.  

 

Drop me a comment below if you have any other questions about tracking loans or about QuickBooks. I'll be happy to help you further. Wishing you and your business continued success.

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