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ivirtue
Level 2

Negative Liability Accounts

I have a new client that started QBO on Jan 1, 2020. She has a few loans that were taken out in 2019, but payments continued in 2020. I started liability accounts for each of these loans and categorized them accordingly as the transactions came through the auto bank feed. I did not enter an opening balance because I did not want the OBE account to have all of those negative entries. Before I hand the file over to her CPA, I want to offset the negative balances on the balance sheet. Do I enter a JE? If so how?


Thanks.

Solved
Best answer January 20, 2021

Best Answers
Rustler
Level 15

Negative Liability Accounts

You do what you you should have done to start with, you find the loan balance as of Jan 1 and enter that as the starting balance.  What were you thinking by not wanting a liability to show

 

create a journal entry, debit owner equity and credit the loan account for the amount of the loan starting balance, date the entry for 1/1/20

View solution in original post

4 Comments
Rustler
Level 15

Negative Liability Accounts

You do what you you should have done to start with, you find the loan balance as of Jan 1 and enter that as the starting balance.  What were you thinking by not wanting a liability to show

 

create a journal entry, debit owner equity and credit the loan account for the amount of the loan starting balance, date the entry for 1/1/20

View solution in original post

ivirtue
Level 2

Negative Liability Accounts

 
ivirtue
Level 2

Negative Liability Accounts

Originally, I did calculate the loan balance as of Jan 1 and entered it as the starting balance. QBO automatically put the starting loan balance into the opening balance equity account, which threw off my balance in the OBE account. I found on this community site that you are not supposed to enter the opening balance while entering the liability because it will always default to the OBE account. So I redid the liability accounts with no starting balance, knowing I needed to enter it somewhere - I just did not know what account to debit.


Thank you for pointing me in the right direction - I will debit the OE acct. 

 

Have a nice day :)

needadvice
Level 1

Negative Liability Accounts

 
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