My business partner borrowed $2000 from our business. He prepared salaries, and wrote his check less the amount that he owed the business, so the cash is in our main account. The amount borrowed was initially entered as a loan (other current assets). What entry to do I make to properly record this?
Thank you for reaching out to the Community. To record a loan, you must set up a liability account for the loan and create a journal entry to record the loan, and then record all payments for the loan. You'll choose from creating an Other Current Liability (or Current Liabilities) if the loan is to be repaid within the current fiscal year, or a Long Term Liability (or non-current liabilities) if the loan will continue to be repaid after the current fiscal year.
Set up a the loan:
Select Gear, then Chart of Accounts.
In the Account dialog, select either Other Current Liabilities (or Current Liabilities) or Long Term liability.
Enter the detail type Loan Payable.
Give it a meaningful name, like "Equipment Loan from Finance Company Name".
Tap Save and Close.
Then, record the part of the deposit and create a journal entry to record the loan.
Select + New.
Under Other, select Journal Entry.
Enter the amount of the loan and log the proper amounts to the appropriate expense accounts. In the following example, the Liability/Loan account is increased, or credited, while the appropriate expense accounts are decreased, or debited.
In journal entries, the total of the Debit and Credit columns must be equal.
Select Save and close.
Lastly, record loan payments. You must record all payments made for the loan.
Select + New.
Under Vendors, select Check.
From the Account drop-down list, select the liability account you created for this loan.
Enter the Amount of the payment.
Press Save and close.
The set of steps I've shared is a general way on how to record loans in QuickBooks Online. But I still recommend contacting your accountant for further accounting-specific help.
If you don’t have an accountant available, you may visit our ProAdvisors page. You can contact one of our ProAdvisors and ask them for accounting advice.
I'm always here if you need more help. Have a great rest of the day!
@TirzahC Thanks for reaching out. We got paid from a job and that check was deposited in our account. He wrote his salary less of the amount he owed so technically there was no deposit by him. The money was already in the account because he never took it out. How do I show that the money was paid for the loan if its just in the account. What journal entry do I make??