Loan journal entry

@lubos @Brucanna, I have a question about loan journal entries. Supposing I received a loan from multiple source and personal income into my business, I have created a loan liability account and used receive money to receive the loan thus increasing the value of my bank account and the value of my liability.

Now I’ve started paying back the loan, is there a way I can specifically select the source/person I’m paying at the time the payment was made such the my record will show how much was borrowed and how much was paid back to a specific source/person as with purchase invoice and spend money after the invoice has been create, instead of just generally reducing the sum of my liability.

You have a couple of options:

  1. Create a liability account for each loan source instead of amalgamating them into the one account.
    This would mean that BS - Liability section could look busy depending on the number of loans, but would also mean that once the loans are paid back, those accounts remain forever unless they are subsequently consolidated.

Alternatively, and probably neater would be:
2) (a) Under Customise activate the Special Accounts tab.
(b) via Settings - Chart of Accounts - create a new Liability account and make it a Control Account made up of Special Accounts. (use a slightly different account name)
(c) Under Special Accounts create an account for each loan with it nominating the Liability control account.
(d) Go back to the original Receive Money transactions and edit them towards the special accounts.
(e) Once the original liability account has a zero balance, then you can delete it

@Brucanna, Thanks, I actually prefer the second and neater option and I will try to implement that with Special Accounts. The Special Accounts had not been introduced when I started using Manager.

Thanks guys for a very exceptional solution you’ve given us

@Brucanna, I’ve done it using Special Accounts, It’s so neat and exactly what I wanted to achieve. Thanks.

Can I use Special Account for my rent liability too. I don’t just want to use Spend Money from Cash Account whenever I need to pay my rent because I’m not paying it in full once and I like to see it reflect in my Liabilities.

If I can use Special account for my rent, can I also make it auto recurring like a recurring invoice?

You can only initiate cash transactions from the Cash Accounts tab. But you can allocate the transactions anywhere.

There are no recurring operations except sales invoices.

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As the rent liability is only a single account you could show it directly on the BS, however, if you want to consider (pretend) that the unpaid rent is a “temporary loan” then you could add it to the above Special Accounts.

To make it recurring - create a Journal for the Rent (debit rent - credit special account unpaid rent) for the first month, then clone that journal and change the date for the next month and so on. These Journals will lie in the background and as each date passes those Journals will become a live entry.

Then the rent Spend Money gets allocated to the liability account.

Hi,

I have received loan total of 30K from bank. But on the loan statement, the bank state total imbursement of 39,570.00 including interest. Because its an islamic loan so its fixed the loan already.

The problem is how i want to enter it into the BS. Based on your explanantion above its applicable for compounding interest.

the term is 60 month, should i just divide 9,570 into 60 and put into P&L interest charge every month?

TQ

Sorry @mbn8417 I had missed your question.

If you want to show the full amount owing (39,570.00) on the BS then when you deposit the loan your receipt would look this: (Note - you need to create the “Unpaid Interest” asset account)

Then as you suggested “just divide 9,570 into 60 and put into P&L . . every month” by transferring from the Unpaid Interest account, either by journal or make it part of the loan repayment transaction if you are not using Bank Statement Import.


This is how I record it.