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sunnynewmexico
Level 1

Quickbooks Online, Long-Term Liability, and Budgets

Hello!

I have Quickbooks Online and have a Long-Term Liability loan in the amount of $100,000. I have set up a Chart of Account with that opening balance. I need to record the principal payment of $1,502.27 on the Chart of Account ledger, so that on my Balance Sheet it shows how much is still owed on this loan. I also need to expense the principal payment plus the interest of $339.73 from a Budgeted line item. When I cut the check, it's not a problem to expense it from that Budget line item, however, when I record the payment to the Chart of Account Ledger, I am only recording the principal payment and it asks me what account to take it from. When I say the Budget line item, it messes things up. It shows a credit in that line item for the principal and a debit for the interest. What am I doing wrong? Please help!

Thank you in advance!

8 Comments 8
jmwatkins
Level 3

Quickbooks Online, Long-Term Liability, and Budgets

Are you using the Write Check window? If so, when you cut the check, you have two lines. First line is the principal and the account is the Long-term Liability account for the loan. The second line is for the interest and that is the Interest Expense account. This should Debit the liability account (decrease it) and Debit the Interest Expense Account (increase it).
sunnynewmexico
Level 1

Quickbooks Online, Long-Term Liability, and Budgets

Thank you! Where does the principal amount show on the books? I get that it comes off my ledger, but can I expense that amount from a Budgeted Line item?

jmwatkins
Level 3

Quickbooks Online, Long-Term Liability, and Budgets

You don't expense a liability. The liability shows on the Balance Sheet.
rubbrchicken
Level 1

Quickbooks Online, Long-Term Liability, and Budgets

I have the same question.  I understand that you don't expense a liability, but I do need to budget the expense and show the payments in principal and interest categories.  So, while my liability line on my balance sheet is correct, my budget vs actuals report shows no transactions for my mortgage principal.  Is there a way to connect an expense category to a liability category?  Is there a way to add a liability category to a budget?

TaylorTasks
Level 1

Quickbooks Online, Long-Term Liability, and Budgets

Repost: I have the same question.  I understand that you don't expense a liability, but I do need to budget the expense and show the payments in principal and interest categories.  So, while my liability line on my balance sheet is correct, my budget vs actuals report shows no transactions for my mortgage principal.  Is there a way to connect an expense category to a liability category?  Is there a way to add a liability category to a budget?

 

Does anyone have an answer to this question?

MaryLandT
Moderator

Quickbooks Online, Long-Term Liability, and Budgets

Connecting an expense category to a liability category isn't an option, TaylorTasks.

 

You can only assign one category per line item. If you need to know how QuickBooks track your loan and its payment, please browse this link: How to record a company loan from a company officer or owner.

 

It has a sample journal entry so you know what accounts to debit and credit. And, you need to select the liability account when recording the loan payment.

 

About adding a liability category to a budget, please know that creating a budget works differently in QuickBooks. The system monitors your expected income and expenses with the actual entries.

 

Also, the Budgets vs. Actuals report summarizes accounts alongside your actual account totals. You need to make sure the accounts used on the journal entry for the loan are correctly categorized. That way, you'll be able to compare how much you're under or over budget.

 

I'm adding this link to learn how to run financial reports to compare your actual sales and expenses with your budget: Learn how to get your budgets into QuickBooks.

 

If you need more help with tracking your loans, I recommend consulting with your accountant. They can provide specific instructions on what accounts to debit and credit.

 

Let me know if there's anything else you need by commenting below. I'll be around to help record your loans in QuickBooks.

TaylorTasks
Level 1

Quickbooks Online, Long-Term Liability, and Budgets

Perhaps an analogy will help you understand the dilemma I'm attempting to resolve: Imagine you earn $2K per month and your mortgage payment is $1K. If while planning your household budget, you didn't account for the $1K mortgage payment, it may appear that you have $1500 to spend on girls trip, right? This would put you in the hole of $500.00

 

I need to begin the budget planning process for a client, and clearly part of that process includes forecasting amounts coming in AND amounts going out. Surely, there's a way to do this in QBO, otherwise what is the point of the budget?

 

TaylorTasks
Level 1

Quickbooks Online, Long-Term Liability, and Budgets

Is anyone able to help with this specific concern: I need to begin the budget planning process for a client, and clearly part of that process includes forecasting amounts coming in AND amounts going out - INCLUDING AMOUNTS PAID TO LONG-TERM LIABILITY ACCOUNTS. Surely, there's a way to do this in QBO, otherwise what is the point of the budget?

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