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An EIDL loan is a liability, not an asset. The money you get is deposited in a bank account and you create a loan liability account named for the EIDL.
When the time comes, you either pay it back, or it is moved to Other Income with a journal entry
debit loan, credit Other Income.
An EIDL loan is a liability, not an asset. The money you get is deposited in a bank account and you create a loan liability account named for the EIDL.
When the time comes, you either pay it back, or it is moved to Other Income with a journal entry
debit loan, credit Other Income.
I am confused by this as well.
In the quickbooks tutorial on how to set up a loan :
It clearly says to credit your newly created liability account, and debit an Asset account but I am stumped as to which account that might be as well.
You will debit either your cash account or bank account, wherever the proceeds of the loan are deposited to the business, when those proceeds are made available to you. In this particular case of an EIDL, you are receiving the funds as a deposit to your bank account, so the bank account will be debited using a journal entry with an equivalent credit to the loan account.
For other loans: You may also debit an asset account, if the loan was used to purchase or finance the asset directly (example).
And another one here.
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