Posting of Bank Loan to the System

[Najrash]

Good day, All

I just got a small loan assistant from my bank, and I want to enter it into my account package. How do I add it to my cast at the bank?

Can I add the loan amount through the capital account? Or I should enter it with journal entry to retain earnings?

Or is there a better way apart from these two method to post the loan on my accounting system?

[Joe91]

A loan to a business is a liabilty for the business

You need to create a loan account as a Liability account

Then you create a receipt transaction to record the loan amount received in your bank account

[Najrash]

@Joe91

You need to create a loan account as a Liability account

I have created a bank loan to the liability section

[Najrash]

@Joe91

Then you create a receipt transaction to record the loan amount received in your bank account

Is this how am going to post the money received as loan?

[eko]

@Najrash

Is this how am going to post the money received as loan?

Yes. You will see that your 2201 - IPATA “bank and cash accounts” will have 1 million Naira received and that the Loan in liabilities also shows 1 million Naira.

[Najrash]

OK…

If i want to repay the loan with interest attached, how will I go about it please?

Let’s assume the loan interest is 50,000. Will I post the interest as expenses to bank charges?

[mam970]

Just reverse the action. Through payment tab issue the payment, and the account reflecting the transaction will be Bank Loan as debit, so the payment amount will be deducted from the loan balance.

[eko]

See:

How to create a loan account

A loan to the business is recorded as a Liability account. This is created in Settibgs / Charts of Accounts The money received is recorded using a Receipt transaction Repayments are recorded using a Payment transaction Interest charged would be posted to an expense account

Thus:

1. In chart of accounts create a Interest on Loans expense account.
2. The create a Payment from your chosen bank or cash account and add 2 line items, one where account is Bank loan and the other Interest payment on loans see screenshot

So this will reduce the amount under the Assets Bank/Cash and Liabilities Bank Loan to whatever amount you decided to repay and add in this case 50,000 to the Expense account Interest payment on loans.