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medbill-jh
Level 2

Loan from shareholder in Nov. 2017, repayment in 2018. Can expense be claimed at repayment? If so, how do I enter in QB w/o affecting bank balance?

 
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Best answer February 06, 2019

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qbteachmt
Level 15

Loan from shareholder in Nov. 2017, repayment in 2018. Can expense be claimed at repayment? If so, how do I enter in QB w/o affecting bank balance?

There is no JE to enter: "The problem I'm encountering is when entering the 2017 loan from shareholder as a JE"

 

If the Loan Proceeds went to the Bank, that is a Deposit entry; not a JE. The Payments are Check Expense entries, not JE.

 

"Since the expenses would go into 2017 books"

 

It's not Expense.

 

When you transitioned into using QB, you should have had Trial Balance. That includes Loan, Fixed Assets basis, depreciation, Banking, and Equity data.

 

Being in debt reduces Equity. Nothing here is Expense. If you never entered the loan balance, that was an oversight for the transition into using QB. You should have:

Debit Equity and Credit Liability for the Loan Principal as of the date you left one accounting system and moved to another. It Reduces Equity and Increases the Liability account, to show what you owe has affected the health and wealth of the business.

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4 Comments 4
qbteachmt
Level 15

Loan from shareholder in Nov. 2017, repayment in 2018. Can expense be claimed at repayment? If so, how do I enter in QB w/o affecting bank balance?

Nothing here is Expense. Loans are not income or expense, except if you had to pay Interest Expense on the debt.

 

You seem to be confusing Expense and Expenditure. Expenditures are Cash Flow, but not all are Expense. Getting a loan is Liability = on the Balance Sheet, not the P&L. Paying down debt, such as Shareholder Loan, Mortgage, vehicle Loan, Credit Card Balance, Payroll Liability, these are Expenditure, not expense.

medbill-jh
Level 2

Loan from shareholder in Nov. 2017, repayment in 2018. Can expense be claimed at repayment? If so, how do I enter in QB w/o affecting bank balance?

This makes sense to me, thank you for the confirmation.  The problem I'm encountering is when entering the 2017 loan from shareholder as a JE, I have to balance the credit/debit.  QBO is asking me to expense the amount into expense accounts.  I'm not sure how to accurately do this.  Since the expenses would go into 2017 books, for which we are not using QBO, does this matter or can you recommend a different way to get the loan into QBO without expensing?  

qbteachmt
Level 15

Loan from shareholder in Nov. 2017, repayment in 2018. Can expense be claimed at repayment? If so, how do I enter in QB w/o affecting bank balance?

There is no JE to enter: "The problem I'm encountering is when entering the 2017 loan from shareholder as a JE"

 

If the Loan Proceeds went to the Bank, that is a Deposit entry; not a JE. The Payments are Check Expense entries, not JE.

 

"Since the expenses would go into 2017 books"

 

It's not Expense.

 

When you transitioned into using QB, you should have had Trial Balance. That includes Loan, Fixed Assets basis, depreciation, Banking, and Equity data.

 

Being in debt reduces Equity. Nothing here is Expense. If you never entered the loan balance, that was an oversight for the transition into using QB. You should have:

Debit Equity and Credit Liability for the Loan Principal as of the date you left one accounting system and moved to another. It Reduces Equity and Increases the Liability account, to show what you owe has affected the health and wealth of the business.

medbill-jh
Level 2

Loan from shareholder in Nov. 2017, repayment in 2018. Can expense be claimed at repayment? If so, how do I enter in QB w/o affecting bank balance?

Perfect, that confirms my original thought process!  I initially entered it that way when we migrated.  However, I felt like I was missing something, for some reason, and decided to do a little research within the QB help section to get reassurance.  Stumbling on a post that recommended a JE completely confused me, since that was nowhere on my radar!  That's how my question about expenses came into play and it just snowballed from there.  I really appreciate your feedback, thanks for the confirmation!

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