How to Account for a Loan with Journal Entries

How to Create a Loan Account:

1. On the left-side menu, click Accountant > Chart of Accounts.
2. At the top right, click the 'New Account' button.
3. In the Account Type field, select Loan and Line of Credit under the Liabilities & Credit Cards section.
4. Name the account, select the currency, and enter a description, if applicable.
5. Click 'Save'.

How to Account for a Loan Received:

1. On the left-side menu, click Accountant > Journal Entries
2. At the top right, click the 'New Entry' button.
3. Enter the date and description.
4. In the first row, debit the account where you received the loan with the loan amount.
5. In the second row, credit the loan liability account with the loan amount.
6. Click 'Save'.

How to Account for a Loan Repayment:

To record a loan repayment, create a new journal entry for each repayment transaction.

1. On the left-side menu, click Accountant > Journal Entries
2. At the top right, click the 'New Entry' button.
3. Enter the repayment date and description.
4. In the first row, for the Account, select the loan liability account you created, then enter the principal portion of the repayment in the Debit column.
5. In the second row, for the Account, select the bank account where the loan is being repaid from, then enter the total repayment amount in the Credit column.
6. To add interest, click 'Add line'.
7. In the third row, for the Account, select Interest Expense, then enter the interest amount under the Debit column.
8. Click 'Save'.