How to record payoff of loan on client trade in

I'll show you how you can pay off the loan, eastend1.

In QuickBooks Online (QBO), you can set up a liability account to record the loan and its payment and be able to track what you owe. To do so, you can follow the steps below:

1. Go to the Gear ⚙ icon, then select Chart of Accounts.
2. Select New to create a new account.
3. From the Account Type ▼ dropdown, select Long Term Liabilities. If you plan to pay off the loan by the end of the current fiscal year, select Other Current Liabilities instead.
4. From the Detail Type ▼ dropdown ▼, select Notes Payable.
5. Give the account a relevant name.
6. Choose when you want to start tracking your finances. In the Balance field, enter the amount in the account, and determine the as-of-date. Enter today's date if you want to start tracking immediately.
7. Select Save and Close.

Once you want to make a payment towards the loan, you can record it against this account. To enter loan repayment. Here's how:

1. Select + New.
2. Select Check. Or if you're in the Business view, follow the steps to switch to Accountant view first. Then come back to these steps.
3. Add a check number if you plan to send an actual check. If you use direct withdrawal or an EFT, enter Debit or EFT in the Check no. field.

Next, enter the following in the Category details section of the check:
 

1. On the first line, select the liability account for the loan from the Category dropdown. Then enter the payment amount.
2. On the second line, select the expense account for the interest from the Category dropdown. Then enter the interest amount.
3. On additional lines, add any additional fees. Select the appropriate accounts from the Category dropdown.
4. When you're done, select Save and close.

Moreover, learn how to you can run basic reports so you'll be able to acquire the information you need: Run Reports In QuickBooks Online.

Please touch base with us here if you need further assistance when recording a loan. We'd be glad to help.

That doesn’t answer the question. We didn’t take a loan out. We paid off a loan associated with something that was traded in to us. 

@eastend1 

The $100K loan payoff can be added as another line item on the bill.  Create a liability account called 'Client Loan Payoff' (or something similar).  Then, add that line item to the bill as -$100K.  So, you will have a bill with $150K for the boat value, -$50K Client Trade Liability, and -$100K Client Loan Payoff, which nets to $0.  Then, when you pay off the loan, assign the newly-created 'Client Loan Payoff' liability account to the check/payment. 

I think you are on the right track. However I still cannot get this to work. The negative offset for client trade liability (the amount the client will receive on trade) must match the purchase price we paid for their old boat. Following your logic the client trade liability will be reduced by the equity (gap between trade value and amount owed on trade). Any other ideas here? 

Thank you for clarifying. I was confusing myself regarding the payoff of the customer loan. I recorded the payment as an asset and will clear it out when the new deal closes. Thank you for the help. You answered my question completely!

Hello, Rainflurry.

I appreciate you for always sharing your knowledge about QuickBooks. This will definitely help other users as well in the future. Please keep on posting here in the Community.

Stay safe and have a great rest of the day.

I have a very similar situation. Curious if you are willing to share how you invoiced the sale with trade in and loan payoff amount to the customer? Did you just tack on the rollover loan amount to the sale price of the new unit? 

Thank you!

I recorded the invoice with trade in normally (see my original post above). Use negative value for trade in which is linked to corresponding liability account. 

The money going out of the bank to bank (to payoff loan) I made an asset (Trade-in Loan Payoffs). Thought process is that since I paid the loan off the client owes me if they want the boat back.

When the new boat arrives and we invoice the client I record on invoice their trade in against the new boat purchase as I do for all transactions. The client effectively owes me now for the old boat and new boat. In my case client took out new loan and funding arrived to our bank account. Created a bank deposit that zeroed out the Trade in Loan Payoffs account and the difference applied to their invoice balance to match what arrived in the bank.

Hopefully this helps - it’s confusing but the guy above that answered the question helped. Don’t over think it.