We work with several companies, and one of them requires a loan from us. I found some previous questions related to this topic, but I still have doubts.

When our company provides a loan to another company, how should we account for this loan? Should a journal entry be created, and if so, how should it be recorded? What accounting accounts should be used?

Would it be correct to issue a check for the loan and record it using the following accounts:

• Debit: Loan Receivable  $850
• Credit: Bank   $850

And when the loan is repaid, to record the deposit as:

• Debit: Bank $900
• Credit: Loan Receivable  $850
•                Service fee  $50 (income)

We are not charging interest, nor are there any set repayment terms. The other company will repay the loan when it is able to. We are only charging a service fee of $50 for providing the loan, on top of the $850 loaned amount.

Could you please confirm if the method I plan to use for accounting is correct, or advise how it should be done? I am using QuickBooks Desktop 2021.

Thank you for your assistance.