Loan to company problems

We receive loans from several private lenders in our company business bank account. We assign the receipt to a long-term loan liability account as recommended on the forum. However, It shows this as a withdrawal from the bank account in Manager and as a laibility in the liabilities account. However, the loan amount in reality provides a positive balance in the bank account from which we make payments.
Question 1: So how do I manage to add the liability that has to be repaid while also making payments from the bank account? I am confused as in Managert he bank account goes into the negative.

We need to pay interest of 6% after a one year period while loans vary from 5 to 10 years.
Question 2: How, do you best account for this in Manager?

Any help greatly appreciated as we are really stuck and it looks like we make double payments. Thank you in advance!

1 Like
  1. Sounds like you made a payment rather than a receipt in the Bank Account
  2. When you pay the interest from your bank account, charge it to an expense account - you might like to create an expense account to record the interest payment

Thank you indeed the case, stupid!
Do not really know what to d with interest, does the interest not get added to an account receiveable?

Most certainly not - an account receivable is money owed to the company which is hardly the case of an interest charge on a loan from a third party

If you want to record the interest charge to your P & L before you actually pay the interest, then you should set up a liability account Interest Owed and credit the interest to this account and debit it to the expense account using a Journal entry

You could also credit it to the Loan account but that is not necessarily the best way to account for the interest charge

If you want to better keep track of everything (how much you owe to each entity and how much you paid of interest to each one) you have to make it a little bit more elaborate.

You better create two special account one for long term liability (loan) and one for short term (interest) each one subdivided by lendets. Each time you have to pay interests you have to do a journal entry to register the short term liability.

Thank you both, Joe91 yes was not thinking, we we the lender and the interest. A combination of both your answers is what I will try: ie Use the special account I already created for Long_term loans by lender and create a similar special account for Interest Owed by each lender.

Related to this is the calculation. I guess that I just need to make journal transactions for example year 1 with 0 owed (gratuity year) and then year 2, 3, etc with the spreadsheet I have with calculated amounts? Thank you once again