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Record a loan for an asset in QuickBooks Online

by Intuit Updated 3 weeks ago

Learn how to record a loan for an asset in QuickBooks Online.

While running your business, you might need a loan to purchase new assets like vehicles, equipment, buildings, or machinery. In QuickBooks Online, you can record loans and loan payments, set up an asset, and record depreciation of assets. Here’s how.

Set up a liability account

To record a loan for purchasing new assets like a car or a truck, set up a liability account first.

  1. Go to Settings Settings gear icon., then select Chart of accounts (Take me there).
  2. Select New to create a new account.
  3. From the Account Type ▼ dropdown, select Long-term Liabilities, then select Notes Payable from the Detail Type ▼ dropdown.
    Note: if you plan to pay off the loan by the end of the current fiscal year, select Other Current Liabilities from the Account Type ▼ dropdown, then Loan Payable from the Detail Type ▼ dropdown instead.
  4. Name the account. For example: If you’re buying a truck, create an account called Loan - Truck.
  5. Leave the opening balance blank.
  6. (Optional) Add a description to add extra information about this account. 
  7. Select Save.

Create a journal entry for the loan

To apply the loan to the proper asset accounts, create a journal entry.

  1. Select + New.
  2. Select Journal entry.
  3. For the first line under ACCOUNT, select your new liability account.
  4. Enter the amount of the loan under CREDITS.
  5. For the next line, select the appropriate asset account under ACCOUNT.
    Note: We populate the DEBITS column automatically based on the amount in the CREDITS column.
  6. Select Save or Save and close.

You'll notice that the debit and credit are the same value. Whenever you make a journal entry, these two values should cancel each other out. This happens because we take money from one account and apply it to another. We increase or credit the loan/liability account and increase or debit the right asset account.

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