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How to Record a Loan Receivable in QuickBooks?

Loan receivable is an amount which is owned by the client/customer. QuickBooks accounting software has a feature to permit the […]

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Loan receivable is an amount which is owned by the client/customer. QuickBooks accounting software has a feature to permit the recording of the loan receivable. The procedure of recording the loan receivable can be different according to the loan type which has been applied. Here in this article, we will share the complete information and help you to learn the process of recording a loan receivable in QuickBooks accounting software. So, read this module till end.

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There is a feature which allows you to “record a loan payment in QuickBooks” by creating a liability account. As a loan, cash and non-cash asset both are the liability, you can have the track of both the amount and interest payments with the same or different accounts. We will learn this process in details below in this article.

What is the Procedure to Record a Loan Receivable in QuickBooks Accounting Software?

Loan receivables can be used to record the loans made to client/customer, to record the loan for an employee, and record a loan to other company. These transactions can be record and tracked accordingly; It is necessary after all getting repayment and recording. Users are required to create an asset account, and then use it to record loans payable in QuickBooks accounting software:

What is the Procedure to Create an Asset Account to Record Loan?

Below are few steps given which you are required to adhere to create an Asset Account to Record Loan:

  • You are required to navigate to the list menu in the first step.
  • In second step, you are required to choose the Chart of accounts.
  • You need to select the below-mentioned option in the type field:
    • If loan will be paid after one year then you need to select the Other Current Assets option.
    • If loan will be paid in the current year then you need to select the Other Assets option.
  • Now, click on the continue option.
  • You are required to enter Account Name and Description.
  • From the tax line dropdown menu choose the Tax from option.
  • Now in the final step, you need to enter the amount paid for the loan and click the ok option.

How to Record the Loan Payments?

Below are few steps given which we are required to follow to record the Loan Payments:

  • You are required to navigate to the banking menu in the first step.
  • After that, hit on the Make Deposits options.
  • Link the payment through the Payments to Deposit window.
  • In this step, you need to enter the name of customer/company/employee who is returning the loan,
  • Now, you need to choose the Asset Account which was created by adhering the aforementioned steps.
  • You need to enter the amount paid by the debtor along with the name.
  • Also, you are required to choose the interest Account created for recording interest received from loan repayment.
  • Also, you need to enter any other fee received, and link it with the correct account.
  • In the last step, you need to click Save and Close.

What is the Procedure to Record a Loan to an Employee in QuickBooks Accounting Software?

You can use the advance payment option available in QuickBooks accounting software to record loans to an employee. Here are few steps given-below:

  • In the first step, you are required to choose the accounting option from the left panel.
  • Now, navigate to the Chart of Accounts tab, and hit on the New option.
  • After that, choose the other current assets in the Account Type.
  • Now in this step, you are required to choose the employee cash advances in the Detail Type and click on save and close option.

This is the easiest way to record the loan or advanced payment to an employee, or contractor of the company.

What is the Procedure to Record Repayments by the Debtor?

You are required to adhere the below-mentioned steps to record repayments by the Debtor in QuickBooks accounting software:

  • In the first step, you are required to navigate to the Banking menu.
  • After that, make the selection of the Make Deposits option.
  • Now, you will see the Payments to Deposit window. This window can be used to link the payments properly in QuickBooks.
  • Now mention the debtor’s name and choose the asset account created to track the loans.
  • In this step, you need to enter the amount which is repaid against the loan by the debtor.
  • Now, enter the amount of interest earned on the loan and link it with the respective interest account.
  • If there is any other fee you need to create the new lines to enter any additional fee related to the loan.
  • And once the above steps are done, hit on the Save and Close option.

In QuickBooks accounting software, there is an option to create multiple lines within a transaction to record any other information or charges related to the loan. These charges and interests linked with the accurate accounts help users to create the better financial statements. If you do not link the fees and charges with the respective account that can create the issues in maintaining the books of accounts.

This is advisable that users follow the method to create an asset account to create interest accounts related to the loan. You can record all the interest received from the loan repayment in this account.

What is the Procedure to Record Loans as Advance Payment?

In QuickBooks there is another feature which is to enter a loan as an advanced payment to the employee. This can come in handy if you have provided the loan to one of the contractors and are not charging any interest rate. You can make future deductions from payments to the contractor to easily get repayments in this way. This method significantly reduces the amount of tacking that you are required to do as a user.

Here are few steps given which you are required to adhere to record a loan to other company as an advance payment:

  • In the first step, you are required to choose the Accounting option which is available in the left panel of the home screen.
  • Now, you need to click on the new option in the Chart of Accounts menu.
  • After that, navigate to the account type and choose the Current Assets.
  • Post that, navigate to the Detail Type and choose the Employee Cash Advances.
  • Once all the above steps are done select the save and close option.

In QuickBooks accounting software you will get the feature to record the loan receivable with valid information. Whether you are required to record the loan receivable for open invoices or for any other purposes, you can always enter the loan receivable in the QuickBooks accounting software. In this article, we have mentioned all the required information for you on how to record a loan receivable in QuickBooks accounting software.

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What are the Steps to Follow to Track a Loan to a Customer?

Below are few steps given which you need to follow to track a loan to a customer:

In the first step, you are required to click on the Gear Icon and then navigate to the Chart of Accounts.
After that, hit on New and choose the Current Assets from the dropdown menu.
In the next step, click to choose under detail type Loans to Others and hit the next option.
You can give the name according to your wish like Customer loan.

How to Categorize the Bank Loan Account When I connect to a Bank Loan Account?

Below are few steps given which you need to follow to categorize the bank loan account:

In the first step, you are required to click on the Gear Icon and then navigate to the Chart of Accounts.
After that, hit the new button and select the long term liabilities in the account type drop down list.
Now, choose the notes payables in the detail type drop down arrow.
And here you are required to give the account a relevant name, like “Loan for a house.”

What Steps to Follow to Adjust a Loan Balance in QuickBooks Accounting Software?

Below are few steps given which you need to follow to adjust a loan balance in QuickBooks accounting software:

In the first step, you are required to navigate to the list option and select the Chart of Accounts.
After that, click right on the long term liability account and select the Edit Account.
In this step, you need to hit on the change Opening Balance button in the Edit Account window.
And once you are done with the above-mentioned steps click on Save and Close.

What is the Way to Record a Loan Repayment on a Balance Sheet?

When the business records a loan payment, you debit the loan account to remove the liability from the books and credit the cash account for the payments. Repayments are made over time to cover interest expenses and the reduction of the principal loan for the amortized loan.

Can we Consider the Loan Amount as an Asset?

Yes, loan amount can be considered as an asset because loans made by the bank usually account for the largest portion of a bank’s assets and this legally binding contract is worth as long as borrower repay the loan amount.

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