What is the best way to track "coverdraft" lines of credit on chequing accounts?

The LOC is a loan, and should be set up that way in QB, I use a CC type account for that.

1. you write the check to the supplier

2. your then use the plus menu and select transfer, transfer that amount from the LOC credit card to the bank account

later you pay back the LOC CC

The only time the LOC would be debited during that transaction is if a deposit was made to bring the balance up over zero, and when that happens do a transfer again but this time from the bank to the LOC CC and to an interest or bank fee expense account (I expect there is a fee for this)

Thank you for the reply, but I may need to clarify a little.

When I make a debit transaction with my debit card, the money is taken from my chequing account which currently has a balance of $0. I've just started a new business, so this isn't an issue.

The way my bank works, is when the chequing account is negative (due to the recent transaction), they automatically make a transfer from the LoC to cover the deficit. Once I import my statement into QB, it shows up as three transactions. A debit from chequing, and a transfer from LoC to Chequing.

I'm wondering how to properly code these automatic transfers. I hope that clarifies my request.

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@jason36 wrote:

The way my bank works, is when the chequing account is negative (due to the recent transaction), they automatically make a transfer from the LoC to cover the deficit. Once I import my statement into QB, it shows up as three transactions. A debit from chequing, and a transfer from LoC to Chequing.

I'm wondering how to properly code these automatic transfers. I hope that clarifies my request.

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you write the check for expenses or whatever, that credits the bank account making the balance negative - normal

the bank makes a deposit in the checking account, debit, to cover the check, and makes an entry in the LOC to show you owe money (credit)

there is nothing to code