How to allocate a loan that paid vendor direct.

Hi livepilot, we can set up a loan account and create Journal Entries (JE) to allocate the transaction.

Since this paid the expense to the vendor directly, it didn't reflect in your checking account. You can record it this way:

To start, set up the loan account:

1. Go to Settings and select Chart of Accounts.
2. Click the New account button and enter a name for the account.
3. Select the Long Term Liabilities as the Account Type. Then Notes Payable for the Detail Type.
4. Input the Unpaid balance and the As of Date.
5. Click Save.

Next, create a JE for the loan proceeds:

1. Go to the +Create button and select Journal Entry.
2. Select the Inventory Asset or the appropriate Expense account, and enter the loan amount for the Debit section.
3. For the Credit section, select Loan Liability and input the same amount.
4. Click Save.

After setting it up, record a bill to reflect accounts payable.

Then, offset the loan with another JE:

1. For this entry, select Accounts Payable in the Debit section, input the loan amount, and select the corresponding vendor.
2. Select Loan Liability and enter the same amount for the Credit section.

Finally, record the payment for the bill:

1. Click the +Create button and select Pay Bills.
2. Choose the bill from the list and click Save.

To ensure the records are precise and properly managed, you may consider consulting an accountant for their professional guidance.

You can also get your books exactly right. Our QuickBooks Live Assisted are ready to help you categorize and reconcile your transactions.

Please let us know if you require further assistance or clarification.

@livepilot 

The answer provided by @ThomasJosephD won't work, and it's clear they didn't understand your question.  It will double your loan amount and create and pay a bill that you don't have.

The easiest way to handle this is to use a $0 bill.  Enter a bill for the vendor.  Enter the inventory items (or Category if you lump them into one inventory asset account) as positive amounts.  Then, enter the loan payable liability under 'category' as a negative amount.  That's it.  You should now show the inventory as an asset on your balance sheet with a corresponding amount as a loan payable to your bank.  Hope that helps.