Quickbooks 2019 Tutorial for Beginners - How to Correctly Record Loan Payments

QBUniversity.org - In this Quickbooks 2019 tutorial for beginners I walk through how to correctly record loan payments.
This can be a confusing area for many Quickbooks Desktop users because it involves splitting the transaction and they are not quite sure where to record the total amount. This video will clarify how to record them correctly.
Discover the top 3 mistakes Quickbooks users make and how to avoid them at QBUniversity.org

[@ravondacole174]

Hi Matt, thank you for the tutorial. What if the car got hit and the insurance totaled it and they sent a check to the bank to pay it off? How do I record it?

[@user-hj4fm5xm7t]

Matt, I have a question. I have a loan that was taken out from my merchant account. There is not an interest rate per say but a fee. The total payment (principal and interest) is taken from my daily sales deposit with the merchant, then the merchant deposited the net of the sales into my account. I know I need to record a debit to Note Payable and Interest Expense, but I am not sure what the other side is since only the net amount was deposited. Would the credit side be to Sales? I am used to the loan amount being drawn from the bank but not the other way around where the payment is taken before the deposit. Your help would be greatly appreciated as I need to get this correct before closing my books. I look forward to your response.

[@jessiema4699]

very clear

[@perniculous]

First, thank you for your awesome videos! My question is: because you entered a bill with the splits, why can’t you just pay the bill like you would any other bill instead of entering the payment directly into the register? Of course when paying the bill you would just assign your own check “number” as EFT or ACH or whatever. TYIA

[@QbuniversityOrg]

You certainly could do that!

[@perniculous]

@@QbuniversityOrg 👍👀👍

[@adrianaybar7483]

Do you have a video that shows how to reconcile a brokerage statement from, let’s say E*TRADE, on QuickBooks desktop pro? Thanks.

[@QbuniversityOrg]

No I sure don't only because I do not have a good sample statement I could use. Great idea though. I will try to get a sample statement so I can do a video like that

[@adrianaybar7483]

The Quickbooks University, thank you. There is a video on KZbin about it, but it’s too confusing for me. I have used your videos in the past and they are great. Thanks again.

[@QbuniversityOrg]

@@adrianaybar7483 thanks so much! I'll look at putting one together!

[@adrianaybar7483]

The Quickbooks University, I can provide you with a couple of my statements with my Personal Information blacked out. You can use whichever you’d see fit. They are simple and include wash sales. Feel free to contact me at [e-mail].

[@morgancollins6691]

Should I put the interest expense under the same class as the building or should I have a class specifically for interest?

[@QbuniversityOrg]

Put it under the same class as the building

[@morgancollins6691]

Thank you for the quick reply. I've been religiously watching your videos for the last month. I've watched some a couple of times to make sure I'm doing stuff right. You have made my intro to quickbooks so much easier. :)

[@QbuniversityOrg]

That’s awesome thanks!

[@lindseywhite4360]

We entered our loan payment and split it between Interest Expense and Principle. However, in our Chart of Accounts it does not record the principle portion paid as Owner's Equity. It decreases the loan amount, decreases the cash, and increases the interest expense. Shouldn't it also increase the Owners Equity? How do we get it to record properly?

[@QbuniversityOrg]

No, this is the correct treatment. The payment to principal should not affect Owners Equity

[@wendydodge9732]

Hi Matt, what if I don’t receive monthly loan statements and do not know the monthly interest/principle amounts?

[@QbuniversityOrg]

We generally estimate it throughout the year then at year end get the actual balance and true it up or down. If you have the original note terms you could also run an amortization schedule

[@dianacomilang1719]

Hey Mat. Just wondering if we can do this and this is proper, since a client wants to increase the loan amount balance by the loan interest as well. I told her that we can't do such since the interest expense cannot be tracked on the loan payable but she has to create an expense account instead. But, since she insisted, would this workaround be fine, if I create a main account called Loan (Long term liability) then 2 sub-accounts for the principal loan and the accrued interest expense so both totals up the Loan (main account) with accrued expense thus the Loan increases by the loan interest? And everytime she pays the loan, Accrued expense is debited and cash credited? Originally, an interest expense is debited for the accrued expense. What are your thoughts? Thank you.

[@QbuniversityOrg]

I've done that exact thing before. What I have done is created an Accrued Interest liability account (as a sub account of the loan, like you said) and then created an Accrued Interest Expense account on the P&L and recorded the accrued interest (liab and exp) that way. Then when it is paid you reduce the liability and reduce cash. You have to be a little careful if they report taxes on the cash basis though since that accrued interest expense is not an expense until it's paid.

[@dianacomilang1719]

I thank you, Mat for your super fast reply. Yes, exactly what I'm thinking. I see what you mean on the last part, thank you for bringing that up, Mat! :-) So, I told her to just do the splitting of accounts for interest expense and the principal, like you illustrated on this video. Thank you so much, it was such a nightmare to me. Thank you.

[@QbuniversityOrg]

@@dianacomilang1719 You're welcome!

[@meyrodrigueskelly8609]

​@@QbuniversityOrg Hey Mat thank you so much for your video, It helps me a lot. I have a kind of the same situation as Diana above, and I'm struggling with it. I have a private money loan that is not have been paying yet and the interest and other fees are adding as principal. I'm still don't get it pretty much because I added as Journal entry, as Loan-Liability and Loan Payables, but some of those is recording negative. Pleassse do a video showing us how to do it? I really appreciate it!

[@QbuniversityOrg]

Mey Rodrigues Kelly I’ll have to do a video on that! So in your comment you said you did a journal entry, but both of the accounts you listed were liabilities. Is that correct? If so then you would have one negative account.