Setting up a liability account for a loan, recording deposits, and changing an incorrect liability account balance

jburski · ‎September 14, 2021

How do I change the balance of a liability account I set up for a loan? We are receiving monies from a loan (so far $10,000 and $5,000); however the P&L statement shows a different balance than $15,000 on that loan. I need to correct it, but I don't know how. Here is what I have done so far:

1. I set up a liability account as follows (according to an answer I received on how to set up a liability account for a loan in my QuickBook on-line software):

a. Account Type = Long Term Liability

b. Detail Type = Notes Payable

c. Name = XXXX Loan

d. Number = 4303

e. Description = Loan from XXXX

f. Balance = negative $10,000

2. When we received the first deposit of $10,000, I entered a NEW DEPOSIT as follows

a. I chose our checking account for the deposit to go into

b. I used account 4303, described it as loan proceeds, and entered $10,000 in the amount column

3. When we received the second deposit of $5,000, I entered a NEW DEPOSIT as follows

a. I chose our checking account for the deposit to go into

b. I used account 4303, described it as loan proceeds, and entered $5,000 in the amount column

After I entered the first deposit, our P&L statement showed a zero balance for the XXXX Loan. After I entered the second deposit, our P&L statement shows a $5,000 balance for the XXXX Loan. It should actually be $15,000.00. I am thinking I should NOT have entered an opening equity balance (negative $10,000) when I first set up the account, but I am unable to change it in my chart of accounts. How do I correct this?

Any direction you can give me would be helpful - thanks!

Giovann_G · ‎September 14, 2021

I know a way to fix this, jburski.

To track the loan, you can set up a liability account with the negative amount. Then, create a journal entry to put the money into your bank. In cases like this, you have the option to remove or delete the first deposit and create a journal entry to put the amount into your checking account. I'll show you the step-by-step process.

Step 1: Remove or delete bank deposits.

Go to the Accounting menu, then Chart of accounts.
Locate the checking account, then click the View register link under the Action column.
Click the first deposit that you create and choose Delete to remove it.

Step 2: Create a journal entry:

Click the + New icon.
Select Journal entry.
On the first line, choose the liability account you created from the Account dropdown, then enter the $10,000 in the Credits column.
On the second line, select your checking account from the Account dropdown. Enter the same amount in the Debits column.
Once done, hit Save and close.

On the other hand, you can delete the opening balance to fix your total loan amount.

Here's how:

Go to the Accounting menu, then Chart of accounts.
Locate the liability account you've created, then hit the View register link from the Action column.
Click the transaction with the opening balance and choose Delete.

Before making any changes, I'd highly suggest reaching out to your accountant first for the proper action to take to maintain the accuracy of your books.

For your reference, I've got these helpful articles for more information:

In addition, let me share this resource to learn how to automatically put your bank or credit card transaction in QuickBooks Online: Connect bank and credit card accounts to QuickBooks Online.

You can always post a reply if you have follow-up questions about managing your liability account. I'm always here to help you. Stay safe!

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Setting up a liability account for a loan, recording deposits, and changing an incorrect liability account balance

Setting up a liability account for a loan, recording deposits, and changing an incorrect liability account balance

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