In this blog post, you’ll learn how to record, in QuickBooks Online, payments, and interest you receive when you lend money.
For this example, I’m using a bank deposit and split it to record the payments to principal and interest.
Quick Instructions:
- Click the +New button in the upper right
- Click Bank deposit
- Select the Account the money is deposited into
- Select the Date of the deposit
- Enter a line for the principal payment, Account is the loan account
- Enter a line for the interest payment, Account is your interest income account
- The total should equal the total payment received
- Click Save and close
Keep reading for a complete walkthrough with screenshots:
Example Loan
In this example, I’m using a $10k Loan to ABC Corp. Which you can see below on the balance sheet.
Recording a Loan Payment With a Bank Deposit
To create a bank deposit click the +New button in the upper left.
Click Bank deposit in the OTHER column.
When creating the bank deposit the Account is what bank account the money is deposited into.
In the Add funds to this deposit section add a line for the principal payment. Received from whoever the loan went to. The Account is the loan account.
Next, add a line for the interest. The Account will be your interest income account.
Depending on how you set up your QB account it may have an Interest Earned account, if not you can create one. I prefer to have interest income as an “other income” account.
Below is an example loan payment of $500 that’s deposited into my Checking x1234 account. $450 goes towards principal and $50 goes towards interest.
When done click Save and close in the lower right corner.
Loan Payment on Reports
After recording a payment the amount of the loan on the balance sheet has gone down accordingly.
On the Profit and Loss report you can see the Interest Earned:
If you’re payments are coming through bank feeds you would split the payment in the same way I split the bank deposit.
Scroll down if you’d like to watch a video walkthrough.
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