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YLouis101
Level 2

Loans

Good Day

 

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?

4 Comments
AileneA
QuickBooks Team

Loans

Hello, YLouis101. 

 

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:

 

  1. Select Gear, then Chart of Accounts.
  2. Press New.
  3. In the Account dialog, select either Other Current Liabilities (or Current Liabilities) or Long Term liability.
  4. Enter the detail type Loan Payable.
  5. Give it a meaningful name, like "Equipment Loan from Finance Company Name".
  6. Tap Save and Close. 

 

Then, record the part of the deposit and create a journal entry to record the loan. 

  

  1. Select + New.
  2. Under Other, select Journal Entry.
  3. 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.
  4. In journal entries, the total of the Debit and Credit columns must be equal.

  5. Select Save and close

 

Lastly, record loan payments. You must record all payments made for the loan. 

 

  1. Select + New.
  2. Under Vendors, select Check.
  3. From the Account drop-down list, select the liability account you created for this loan.
  4. Enter the Amount of the payment. 
  5. 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!

YLouis101
Level 2

Loans

Thanks for your reply @AileneA .  The loan was taken from our business not a third party company.  So he owed the business.

TirzahC
Level 4

Loans

Hi, @YLouis101.

 

I’m here to ensure this loan will properly be recorded.
You can use the same current asset account. Then use the deposits to track the payments.

 

Here's how:

  1. Click on the Plus icon.
  2. Select Bank Deposit.
  3. Choose the bank account and enter the date.
  4. From the Add funds to this deposit section, select the employee name from the RECEIVED FROM drop-down option.
  5. Select the cash advance account from the ACCOUNT drop-down option.
  6. Enter the amount. 
  7. Click on Save and close.

 

You can check out this article to help you reconcile your current asset account: Reconcile an account in QuickBooks Online

 

I want to make sure that your concerns are addressed, so feel free to let me know if you have any more questions. Have a good one!

YLouis101
Level 2

Loans

@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?? 

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