Converting loan to payment of invoice

Hi MrMiyagi,

Thanks for posting in the Community!

This depends on how you've recorded the loan amount in QuickBooks Online. I would recommend reaching out to your accountant to guide you on what's best to record the loan amount.

In QuickBooks you can record the loan amount under a liability account.

 

1. From the Accounting tab, select Chart of accounts.
2. Click New.
3. From the Account Type ▼ dropdown, select Non-current liabilities.
4. On the Detail Type, select Notes Payable (or Loan Payable). Give it a Name.
5. In the Unpaid balance field, enter the amount in the account, and determine the as of date.
6. Click Save and Close.

When you're ready to pay the loan amount. Use the Expense transaction to record them.

1. From the + New tab, select Expense.
2. Go to the Category details section.
3. On the first line, under Category, select the liability account.
4. On the second line, select the expense account for the interest from the Category dropdown.
5. On additional lines, add any additional fees.
6. Select Save and close.

Then, to close the invoice you can record invoice payment through + New, and click Receive payment.

You can check this link to learn more about Set up a loan in QuickBooks Online.

Feel free to post your concerns in the Community or click the Reply button for follow-up questions. We'll be happy to help. Have a good day!

Hi there

I have already recorded the loan. 

I have also recorded the invoice. 

I now need to transfer 30,000 from the loan, to pay off the invoice. 

How do I do this?

Hi MrMiyagi,

It's good to hear you were able to record the loan amount in QuickBooks. Loan amounts are usually track under liability accounts, since we're unable to use them in paying the invoice directly. You can create a journal entry to use the loaned amount to pay the invoice. I'd suggest contacting your accountant for additional guidance on what account to use to not mess up your books.

One of them will be able to assist you further with the best account to use to reduce the liability correctly. Also, please know that we can't suggest which account you should select in this type of situation.

Additionally, I recommend the following resource about creating a journal entry: Create a journal entry in QuickBooks Online.

Please let me know if you have any additional questions. I'm always willing to assist.

In the journal entry, I can find the loan account easily, but what account should I be allocating to in order to pay off the invoice?

Hi MrMiyagi,

To be able to apply the Journal entry to the invoice, use the Receive payment option in QuickBooks Online. Here's how:

1. Click on the Sales tab.
2. Click on All Sales, locate the invoice.
3. Click on Receive Payment on the invoice you wanted to apply the journal entry.
4. Under Outstanding Transactions, tick box for invoice and under Credits tick box on the Journal entry.
5. Click on Save and new or Save and close.

You can check this link to learn more about how to Apply a journal entry credit to an invoice in QuickBooks Online.

Let me know if you need more information with QuickBooks Online. I'm always here to help. Have a great rest of the day!