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Blondie8788
Level 2

Recording a loan payment from a customer/vendor

One of our musical entertainers asked for a loan from the owner of our restaurant. We typically pay him $600 to entertain. He took out a loan for $1,300 to buy a vehicle. Instead of him writing us a check to make payments on his loan, we took $100 out of his fees each week. so, instead of paying him $600, we paid him $500. How do I apply that $100 to reduce his balance in Quickbooks Desktop. I have his loan under Other Current Asset. I hope that's correct. So, to sum up...I wrote him a check for $500 instead of the $600. $100 of that check is to be used towards his payment (principal only/no interest involved at all). I am pretty confused...please help!!!

Solved
Best answer October 06, 2021

Best Answers
Jen_D
Moderator

Recording a loan payment from a customer/vendor

I'm delighted to help you record the loan transactions in QuickBooks Desktop, @Blondie8788.

 

When you record a vendor loan in QuickBooks, you need to add a loan account for it. You can check your settings and see if the loan account is set up correctly, following the steps below:

 

  1. Go to the Lists menu, then select Chart of Accounts.
  2. Right-click anywhere, then select New.
  3. Select Other Account Types, then select the right account type for your loan:
    • Create an Other Current Asset if the loan is to be repaid within the current fiscal year.
    • Create an Other Asset if the loan will be repaid after the current fiscal year.
  4. Select Continue.
  5. Enter the name and number for the account.
  6. Select Save & Close.

 

Next, issue a check for the loan using the loan account. This option will put the balance of $1,300 in the register.

 

  1. Select Banking then Write Checks.
  2. Select the account used to fund the loan (Example: Checking or Money Market) for Bank Account.
  3. Choose the account used to track the loan as the off setting account.
  4. Enter the amount.
  5. Select Save and close.

 

Now, if you want to record the payment, simply add the loan account with his check payment. Make sure to add a negative sign so the amount reduces to $500. See this:

 

Once you recorded the payment, this will also reduce the loan balance. See this sample register data:

 

If you have other questions about this, please post here again. I'll be more than happy to help.

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5 Comments 5
Jen_D
Moderator

Recording a loan payment from a customer/vendor

I'm delighted to help you record the loan transactions in QuickBooks Desktop, @Blondie8788.

 

When you record a vendor loan in QuickBooks, you need to add a loan account for it. You can check your settings and see if the loan account is set up correctly, following the steps below:

 

  1. Go to the Lists menu, then select Chart of Accounts.
  2. Right-click anywhere, then select New.
  3. Select Other Account Types, then select the right account type for your loan:
    • Create an Other Current Asset if the loan is to be repaid within the current fiscal year.
    • Create an Other Asset if the loan will be repaid after the current fiscal year.
  4. Select Continue.
  5. Enter the name and number for the account.
  6. Select Save & Close.

 

Next, issue a check for the loan using the loan account. This option will put the balance of $1,300 in the register.

 

  1. Select Banking then Write Checks.
  2. Select the account used to fund the loan (Example: Checking or Money Market) for Bank Account.
  3. Choose the account used to track the loan as the off setting account.
  4. Enter the amount.
  5. Select Save and close.

 

Now, if you want to record the payment, simply add the loan account with his check payment. Make sure to add a negative sign so the amount reduces to $500. See this:

 

Once you recorded the payment, this will also reduce the loan balance. See this sample register data:

 

If you have other questions about this, please post here again. I'll be more than happy to help.

DomNation
Level 1

Recording a loan payment from a customer/vendor

What if the loan repayment includes interest income? Can you also record the interest in the check payment section or is that entered elsewhere?

MJoy_D
Moderator

Recording a loan payment from a customer/vendor

I can share some information about recording loan payments, @DomNation.

 

When writing a check to record loan payments, enter the payment for the loan interest in the Expenses tab. 

 

Here's how:

 

  1. Go to the Banking menu and click on Write Checks.
  2. Select the Bank Account you want to use to pay the loan.
  3. Provide all the necessary information. 
  4. In the Expenses tab:
    1. On the first line, choose the liability account for the principal amount.
    2. On the second line, enter the payment for the loan interest in the interest expense account.
  5. Click Save and close once you're done.

 

For more information about tracking cash and non-cash asset loans, refer to this article: Manually track loans in QuickBooks Desktop. This will also guide you to track interest payments or fees and charges.

 

To see other loan options and to see what else you can do with your loan in different scenarios, use the What If Scenarios tool: QuickBooks Loan Manager.

 

Let me know if you still need help in recording your loan and payments. I'm always here to assist. Have a great rest of the day!

DomNation
Level 1

Recording a loan payment from a customer/vendor

I'm afraid there is a misunderstanding. I am the lender and am receiving loan repayments from a customer. I want to know how to record their payments when received where interest income and principal are both recorded.

jamespaul
Moderator

Recording a loan payment from a customer/vendor

Hello, DomNation. 

 

Thanks for getting back to us and I hope you're doing well since your last visit. 

 

I appreciate the clarification and I do have a way for you to record the loan repayment from the customer.

 

You can use the Make Deposits function to record the repayment and the corresponding interest income and principal. Here are the steps: 

 

  1. Click the Banking menu, then select Make Deposits.
  2. Select the bank account where you want to deposit the money under Deposit To
  3. Under RECEVIED FROM, select the customer's profile.
  4. Select the loan account and the interest income account under the FROM ACCOUNT column.
  5. Enter the amount of the loan repayment and the interest. 
  6. Add a memo, payment method and other information.
  7. Once done, click Save & Close

 

QuickBooks doesn't automatically track and calculate interest, so you'll want to manually calculate it as you enter the amounts. Here's an example of what the Make Deposits screen would look like: 

 

loanrep1.PNG

 

If you need to check on reports to see your income from the loans and other financial data, you can run reports. Check this article to help you familiarize what reports you can run: Understand reports.

 

If you have more questions about recording your loan transactions, fill me in with the details in your reply. Do you have any other tasks to complete in QuickBooks? Let me know and I'll gladly lend a hand again. 

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