How to record loan interest expense alongside loan payment from cash on hand
Hi. I made a loan payment from cash on hand. How can I record this, since I'm unable to modify the expense in the details sections of "write checks," because you can't use "write checks" with cash on hand. I need to show that 458.95 is taken off of the loan, but I need to show that 40.50 of it is interest expense. Problem occurs when I try to designate 40.50 to an expense account on the register of cash on hand, it doesn't reduce the total loan. Thanks for your answer.
How to record loan interest expense alongside loan payment from cash on hand
Do you have a Cash on Hand (Bank type), Interest Expense (Expense), and Loan Liability (either Long-term (>12 months) or Other Current (<12 months) Liability) account in your Chart of Accounts (CoA)?
How to record loan interest expense alongside loan payment from cash on hand
Hi, Tiffany. I just did some account rearranging and I now have a Cash on Hand account. It's a bank type. I have an interest expense account as well. And a Loan Liability account. I think I resolved my own problem. I do have one question that was born out of the response by Rustler below. In my long term loan liability account, should the balance be made up of only the principal amount?
How to record loan interest expense alongside loan payment from cash on hand
@Wheelhouse Yes, the principal is tracked in the Loan Liability account, the Interest is tracked in the Interest Expense account. Though I'm a Certified QB User and Educator, I am NOT a CPA. It is always best to check with your accountant on which accounts to use.
Hope this helps! Tiffany V. Certified QuickBooks User/Educator
How to record loan interest expense alongside loan payment from cash on hand
I may need to set up the loan differently in light of this information. I guess I should only put the principal in the loan account? So the loan is only made up of the principal, and the interest is just tracked in the expense account?
How to record loan interest expense alongside loan payment from cash on hand
This is one way of doing it. Although I don't like this way. Because then you can't see the loan history, and the transactions don't really match up to the statement. Obviously, if no payment was paid, interest would incur irregardless if a payment was made, and would be added to the outstanding loan balance. Although it's not the prettiest. I prefer to have a mortgage loan liability account, and track the interest. Unfortunately quickbooks only allows you to make an ugly journal entry, instead of just being able to add an expense for interest like a credit card account works. But then you have the loan transactions, outstanding principle owed, interest payments, and payments to the loan account. If you were to match it to a loan transaction statement, it would match this.
How to record loan interest expense alongside loan payment from cash on hand
This is one of the closest questions that I have find to my question.
I bought a sales territory (area for vendor route sales - owner/operator). For $159,000. I paid $10,000 down and they financed $123,000 through the company I'm contracted with and the remainder was a personal note. How do I account for my initial payment as well as the "loan" which m paying down with interest.
I'd be happy to pay anyone who can walk me through the correct way to set this up.
[email address removed]
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