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rmp7345
Level 2

how to input this type of entry

hello - not sure how to enter this type of transaction:

1. gave a loan for $5000.00 John

2. John pays me $250 a month for 6 months

3. John pays me back the $5000 at the end of 6 months

 

i like to show this as some sort of temporary liability, i guess?

thanks a lot!

 

Solved
Best answer May 15, 2020

Best Answers
Rejeil_O
QuickBooks Team

how to input this type of entry

Thanks for getting back here in Community @rmp7345,

 

In QuickBooks Desktop, Loan can be an Asset account or Liability account. For the liability account, it is used when you're the one who loaned the money. As for what John_pero said since you're the one who gives a loan to your customer, you can use the Asset instead.

 

Let me walk you through the steps on how to record your customers' loan. Here's how:

 

Step 1: Create an Asset account.

 

  1. Go to the Accountant menu, then select the Chart of accounts.
  2. On the bottom portion, click the Account drop-down arrow and choose New.
  3. Select the Fixed Asset option in the account type.
  4. Click the Continue button.
  5. Enter the desired name of the account.
  6. Select Save and Close.

To learn more about creating an account in the chart of accounts, check out this link:

 

Step 2: Write a check.

 

Once you receive the money loan from your customer, enter a check to record the transaction.

 

  1. Go to the Banking menu, and click the Write Checks.
  2. In the Pay to the order of box, choose the name of the customer.
  3. Click the Expenses tab.
  4. On the Account drop-down arrow, select the Asset account you've created from step 1.
  5. Enter the amount and other information in the fields.
  6. Click Save and Close.

 

Step 3: Make a Deposit.

 

Once done, make a deposit to transfer the money to your bank account.

 

  1. Click the Banking menu, then select Make Deposit.
  2. In the Deposit To field select the bank account where you wanna deposit the transaction.
  3. Click the box under the Received from column, then choose the customer.
  4. On the From Account drop-down arrow, select the asset account you've created from step 1.
  5. Enter the information needed in the fields and the amount you've received from your customer.
  6. Click Save and Close.

 

In case you'll need help on how to edit or delete an account, refer to this link: Create, edit, or delete an account in QuickBooks Desktop.

 

If you need further assistance, feel free to leave a message in the comment section. I'm always here to help. Have a good one!

View solution in original post

7 Comments
Rubielyn_J
QuickBooks Team

how to input this type of entry

Hello there, @rmp7345.

 

I'm here to help record a loan and its payment in QuickBooks Desktop. To start, we need to create a liability account.

Here's how:

  1. In your QuickBooks, go to the Lists menu.
  2. Select Chart of Accounts.
  3. Click the Account dropdown at the bottom, then choose New.
  4. Select Other Account Types, then select Other Current Liability, used for short-term loans payable over one year.
  5. Click Continue.
  6. Enter the Account Name and Number for the account.
  7. Then select Save & Close.

Now that you have a liability account for the loan, issue a check for the loan.

  1. In your QuickBooks, go to the Banking menu.
  2. Select Write Checks.
  3. Select the account used to fund the loan at the Bank Account dropdown.
  4. At the Expense section, choose the account used to track the loan as the offsetting account.
  5. Enter the amount.
  6. Select Save and close.

After, record the customer payments.

  1. Go to the Banking menu.
  2. Choose Make Deposits.
  3. Select the appropriate account in the Deposit To field.
  4. In the Deposit page, enter the necessary information.
  5. Once done, select Save and close.

If you want to keep track of your loans and be reminded about upcoming payments, you can check out this article for reference: QuickBooks Loan Manager.

 

Please don't hesitate to comment below if you have other concerns. I'd be here to assist you as soon as I can. Have a pleasant day!

john-pero
Community Champion

how to input this type of entry

@rmp7345 I sure hope you di not follow the instructions given out by @Rubielyn_J since those are for money you borrowed. The way you presented this, you are the lender and so you create a Current Asset for the $5000 loaned to John.  Each month you receive $250 that is entered as Interest Income. When John pays you back the full $5000 you post it against the current asset. What was presented for you was in fact John's side

rmp7345
Level 2

how to input this type of entry

Thank you John-Pero - your understanding is correct. instead of liability, do i need to create an asset account?

rmp7345
Level 2

how to input this type of entry

Thank you Rubielyn_J - can we flip this around - i am loaning money to an individual 

thanks,

Rejeil_O
QuickBooks Team

how to input this type of entry

Thanks for getting back here in Community @rmp7345,

 

In QuickBooks Desktop, Loan can be an Asset account or Liability account. For the liability account, it is used when you're the one who loaned the money. As for what John_pero said since you're the one who gives a loan to your customer, you can use the Asset instead.

 

Let me walk you through the steps on how to record your customers' loan. Here's how:

 

Step 1: Create an Asset account.

 

  1. Go to the Accountant menu, then select the Chart of accounts.
  2. On the bottom portion, click the Account drop-down arrow and choose New.
  3. Select the Fixed Asset option in the account type.
  4. Click the Continue button.
  5. Enter the desired name of the account.
  6. Select Save and Close.

To learn more about creating an account in the chart of accounts, check out this link:

 

Step 2: Write a check.

 

Once you receive the money loan from your customer, enter a check to record the transaction.

 

  1. Go to the Banking menu, and click the Write Checks.
  2. In the Pay to the order of box, choose the name of the customer.
  3. Click the Expenses tab.
  4. On the Account drop-down arrow, select the Asset account you've created from step 1.
  5. Enter the amount and other information in the fields.
  6. Click Save and Close.

 

Step 3: Make a Deposit.

 

Once done, make a deposit to transfer the money to your bank account.

 

  1. Click the Banking menu, then select Make Deposit.
  2. In the Deposit To field select the bank account where you wanna deposit the transaction.
  3. Click the box under the Received from column, then choose the customer.
  4. On the From Account drop-down arrow, select the asset account you've created from step 1.
  5. Enter the information needed in the fields and the amount you've received from your customer.
  6. Click Save and Close.

 

In case you'll need help on how to edit or delete an account, refer to this link: Create, edit, or delete an account in QuickBooks Desktop.

 

If you need further assistance, feel free to leave a message in the comment section. I'm always here to help. Have a good one!

View solution in original post

rmp7345
Level 2

how to input this type of entry

Rejeil_O - thank you !!!

btks
Level 4

how to input this type of entry

Yes , as John said, a loan to someone else is an asset to you.

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