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Level 1

Recording Loans, Investments and Repayments

I recently took over the books at my place of employment and there seems to be some incorrect allocation of funds (basically its "bank of my boss" and hes loaning out funds to others).

 

I want to explain the situation since its a little tricky. So here are my questions:

 

1. Owner is giving out business loans (as if he were a bank haha) which were recorded as capital investment expenses (which I know is incorrect). Some of these entities are just his friends or partners in other entities but hes just giving out a regular loan waiting to be paid back in full. Some of the payments have been paid in full. Needing to know how to reclass these items since he is NOT involved in the business at all, just funding it and they repay. Whats been happening is the previous person was throwing all the loans into capital investment expense, and recording the repayment as uncategorized income. I need to move that off the P&L because we have about 900k sitting in uncategorized income. 

 

2. There was a second very large business loan for about 785k. 300k of it was taken from an ACTUAL bank loan and added to his own loan from the company of 485k. I need to split these two since the expense was recorded again as capital investment expense in a lump sum. Im not sure how involved he is with this entity but there is a chance there might be just him and one partner. This entire $785k was thrown into again capital investment expense. A partial repayment has been made from this partner but only for 300k, the other 485k is still outstanding. 

 

We have a few equity accounts but some of these dont really pertain to it since hes just funding temporarily for people. What ive seen is repayment in full or a partial (only one which is in question #2). Id like to know how to record this correctly to where we can move this off of the P&L since its all coming up as uncategorized income. All the repayments were thrown into that uncategorized income bucket. All the expenses were either thrown into capital investment expense, business loan, or another type of expense category. 

3 Comments
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QuickBooks Team

Recording Loans, Investments and Repayments

Thank you for posting here in the Intuit Community, @krayolakolorz

 

You can use the QuickBooks Loan Manager to track your loan. This will assist you in calculating the interest and payment schedules. Here’s how to do it: 

 

  1. First, create the liability account to track the loan. Have a new vendor for the bank or financial institution issuing the loan. Set an expense account to track the interest payments. 
  2. Then, record the loan amount.
  3. Lastly, add the payment. 

To make sure that your books are accurate, it would be helpful to consult an accountant to seek recommendations on what account to use in recording this to your QuickBooks Desktop account. 

 

Let me know if you need anything else or further assistance with your account by leaving a comment below. 

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Level 1

Recording Loans, Investments and Repayments

Actually my question didnt have to do with interest perse. Its about the full payment being made back to us within a few  weeks or a month. Its just a loan going out and coming in. There is no interest being charged etc. Just a loan going out and then coming back in, unfortunately this doesnt answer my question regarding the expense, repayment and partials.

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QuickBooks Team

Recording Loans, Investments and Repayments

I've read your original question, Krayolakolorz. Thank you for being so detailed. 

 

Some companies grant loans and want to track the repayments.  I'll guide you with the steps.

 

First, you'll have to create a loan account. You can use Other Asset account if it'll be paid over a period of more than one year. If it'll be paid within the current year, you can use Other Current Asset. Although, I suggest reaching out to your accountant on how to categorize it.

 

Here's how:

  1. Click Lists.
  2. Go to Chart of Accounts.
  3. Click Account, then select New.
  4. Click Other Account Types, select either Other Asset or Other Current Asset, then click Continue.
  5. Fill in the necessary fields, then click Save & Close.

 

Then, here's how you can record the payments:

  1. Click Banking, then go to Make Deposits.
  2. Enter the entity/partner name.
  3. Select the loan account created earlier, then enter the payment.
  4. Click Save & Close

 

When you run a quick report, you will see the loan amount being deducted by the payment. Here's how:

  1. Click Lists.
  2. Go to Chart of Accounts.
  3. Select the loan account.
  4. Right-click, then select QuickReport

 

If you have more questions, please don't hesitate to get back to this thread. We're here to help you. 

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