Make Loan Payments 8022 QuickBooks Online 2023

QuickBooks Online 2023 make loan payments, breaking out interest and principal portions, get ready to start moving on up with QuickBooks Online 2023.


Here we are in our get Greg guitars practice file we started up in a prior presentation using the 30 day free trial, we also have open the free QuickBooks Online sample company.



If you want the to open at the same time, we suggest usin, the Incognito window or another browser, you can open the Incognito window if using Google Chrome by selecting the three dots in the browser,



and then incognito window and then search into the search engine for QuickBooks Online test drive, we’re going to use the sample company to compare and contrast the accounting view the view that the get great guitars files in and the business view,



the view the sample company is in if you want to toggle back and forth between the two views, hit the cog up top and switch the view down below, opening a couple times to put reports in by right clicking the tab to duplicate it,



right clicking the duplicated tab to duplicate it, and then going back to the middle tab to go to the reports on the bottom. And then once you’re in the reports, we’re gonna go into the balance sheet. And then we’re gonna go to let’s check that out in the Business View, by the way,



and the business view, it’s located in the business overview. And then the Okay, I’m going to stop doing that I won’t talk like that anymore. So any case, then we’re gonna go to the tab to the right, and we’re gonna go down to the reports on the left hand side.



And we want to open up the P to the L, the profit and the loss, close up that Bogey, change the range up top, I’m going to do that like dual range two months thing by going from



Oh 10123202 20 823 and then run it. And then I’m going to go to the months dropdown. So we can see the side by side for the months, which is totally cool.



So now I got January, nothing in there for February yet that’s the current month we’re working on. And then the total on the right for the two months up to this time, let’s go to the tab to the left.



This time, I’m just going to do closing the hamburger, the normal range from a 101 to three, let’s go to Oh 228 to three. But I don’t really need to do the months thing on the balance sheet because I don’t think it’s going to add too much value. So we’ll just keep it as is there.



So that’s the setup process we do every time. Now last time, we talked about the loan payable and we put together our amortization table. So now we’re going to be recording payments with our amortization table.



So let’s just recap kind of the issues with the loans, we have a loan on the books, which helped us to finance the company,



a couple of issues with the loans. One, there’s often a short term version portion and a long term portion when we’re paying installment loans off. However, we don’t typically want to have two loan accounts,



a short term and long term version when we’re doing normal bookkeeping, because it’s better to have one account or easier that I can then tie into my amortization table.



Otherwise, the long term and short term portions will differ every time. So you want to just make an adjustment for the long term and short term portion periodically is my suggestion. At the end of the month, or year,



possibly having your CPA firm help you out just to do that breakout and then reverse it, so that you can then do the bookkeeping easily, and have the financial statements when they’re necessary when you’re going to report them.



So we’ll talk about that in the adjusting process, too. You might have multiple loan accounts, in which case, you probably you could put them all in one account, but you probably want a different loan account. And we’ll talk more about that in a future presentation when we add another loan account.



And that way you can tie each loan account into its own amortization table. And then three is the breaking out of each payment. That’s what we’re going to focus on here, when the interest and the loan principal will differ every time.



So we’re going to be looking at the first two payments will actually record both of these. And you can see how the payment is the same, but the interest and the loan reduction or reduction to the principal will differ.



So that means there’s three accounts affected as opposed to two accounts when you pay like a utility bill, only cash and utilities expenses affected here, we’re going to have cash interest expense,



and then the reduction of the loan impacted. That adds a little bit of complexity. Also, I can’t really memorize the transaction, whether that be through the bank feeds creating a rule, for example.



So I can automate the transaction or when I just record the transaction every month manually, because even though the dollar amount is the same,



that breakout that changes between interest and principle makes it a lot more difficult to automate. So what are the workarounds to that? One? Is that is that you could try to stay in a cash basis. system.



And so for bookkeepers that are trying to like, scale up the business and work on a cash based system to the degree they can, might then work with a CPA firm to do adjusting entries periodically,



possibly at the end of the year when tax returns are prepared or something like that. And then they’re just going to record the payments, and reduce the loan principal for the full amount with possibly the bank feeds. And then at the end of the year, you ask your CPA firm to say,



hey, here’s the amortization table. Or if you don’t have the amortization table, hey, CPA firm or tax preparer, I would like you to make the amortization table based on the loan documentation,



and then do the necessary adjusting entries, which might be breaking out the interest and principal portion, so that you could do the tax returns and the financial preparation at that time, and break out the short term and long term portion of the loan, if necessary, for tax return in financial reporting.



At that time, that’s one method you can use to try to automate everything on the on the on the bookkeeping side. The other method is we just take our amortization table, which we might have to create, as we did here, or ask our CPA firm to create.



And we’ll just have to change it every time in accordance with the amortization table. So that’s what we’ll do here to see what that looks like. So let’s I’m just going to highlight this first one and make it green, just to say, okay, that’s the first one that we’re on. And I’ll go over here and say, All right, let’s go to the first tab then.



And just what’s going to happen by the way, this amount is going to go down by the portion, that is the loan reduction taken us to the new loan balance. And then $300 will be interest expense, on the profit and loss, and then the checking account will go down by the full amount.



All right, let’s do it. Let’s go to the first tab. Enough talk, I want to see some action here. All you do is talk man, okay, here we go with the action, we got the vendor information I’m going to go into,



let’s do it with a check form. So I’m going to say the bank that we’re paying, let’s say is Chase. So let’s type in Chase, I think we put that in earlier,



I’m just making up a bank name that we’re going to be paying in, it’s coming out of the checking account tab tab, let’s say the date is at the beginning of the month. So I’m going to say let’s go February, February, oh 20123. So the beginning of the month, and then the 16th, the cheque number should be populating properly now.



So that’s good, I’m not going to print the checks for the practice problem. Down here, we’re going to say okay, here’s where it happens to. So I’m going to see if they have an account for interest expense, interest, I’m just going to type in interest.



And notice they have this interest paid expense type of account, I don’t like the name interest paid. Because you could have interest that you didn’t pay, that’s still an expense on an accrual basis, I would rather it be called interest expense. So I might change it.



But that’s been a little picky, I’m not going to create another account called interest expense, because I don’t like the fact that they call it interest paid, because then I’m gonna have two accounts that are sounded like interest,



and then I’ll mess myself up by posting to both of them. So I’m going to do that. And then I’ll fix it if I don’t like the name of that account. And so then you might want to put in the description like first payment, or something like that, because that might help you to tie it into the amortization table.



Now the interest is coming from here, that’s the 300. So there’s 300, I don’t need a billable or a customer, and then the other side is going to go to the loan payable, loan payable account. There it is, and then I’ll just call it first payment. And that’s for the amount of the 105873.



So one Oh, remember that. Don’t forget 105 8.73. All right, and then the total comes out to the cheque of 135873. And that’s the total 135873 movie b to the b to the n. So what’s this going to do is to check it’s going to decrease the checking account by the by the 135873,



it’s going to have an interest expense on the income statement a 300. And the loan is going to go down by 1058 73, bringing the balance of the loan to 70,009 4127. That’s what should happen, at least unless someone unless someone told me the wrong number.



When I put that in here, and they told me the wrong numbers, that’d be their fault, and not my fault. So let’s go ahead and save it and close it and then we’ll check it out. And then we’ll go into the tab to the right and run it again. Run it



and then we’ll go into the to the to the cash account. And we’re in February, February. And so there it is. So there’s that amount Matt looks Matt looks good movie be in and then we’re gonna go back the other side. on the expense side of things, we got the $300 in February now, see how we got January in February?



Isn’t that cool? Yeah, it is. I know. I know. It’s cool. But anyways, so here’s the interest. Now, sometimes you might want to put the interest down here into like other. Because sometimes you might think of interest as not being like part of your normal operations, it’s a financing thing.



So we might just change it to put it down here, just so you can see what that looks like. And I might change the name at some future point as well. But for now, we can see there it is. And there’s the $300.



And that looks good, just like we would expect. Now the second one, I’m going to record the second one. And imagine a month has passed. So I’m going to record this one as well. This one, I’ll mark off as yellow, meaning it’s done or something or let’s make this one. This one yellow. Yeah. Okay. And so now this one, I’m going to just do it a month later. So I’m still going to put it in February.



So we’re still working in February, but I’ll put it in there, February 28. So you’ve got to imagine a month has passed. And now I’m going to enter the next one, just to see the problem with the fact that I got the same dollar amount, but the interest and reduction in principle are different to account memorize the transaction,



like I’d like to. So let’s do that. Let’s check that out. Then check it out. Check it out. Let’s go to the first tab, I’m gonna go to the plus button, check. We’re gonna check out the check. And then I’ll put this to chase again.



Chase, check out the chase, check. Check it out the chase check. Okay. Okay, just stop. What is this? This is going to be on to 2802 28 to three. And then the check number populates automatically. And then down below. Sorry, my throat got clogged up there. We’ve got the interest now tries to memorize the transaction, which is good.



That’s what we want to have happen. And if it was a bank fee transaction, that would be totally good. Because then we can make a rule to make it do what we want it to do. But we can’t because these numbers change. I’ve got to change this see, to the to 9550 59. Now, two, nine 5.59. Is that right?



Did I go dyslexic on that one to nine? No, I did it right. I know I’m talking about. And then the other side’s going to be five, three, the other side’s going to be 106 314. So 106 3.14,



that gives us the same total down below here of the one three of the 1358. Is that right 135873. But we have a different breakout between these two.



Now, like I say the other way you can work around this is just put the whole amount and loans payable, which means you will not tie out to the amortization table, it will be wrong, because you will not have recorded the interest.



But you can use that that adjusting entry concept of saying, hey, look, I know that and I’m going to adjust it periodically at the end of the month or year or I’m going to have my CPA



do it at the end of the month or year so that I can automate everything, use the bank feeds, use bank rules, possibly make it as easy as possible, and then know which adjustments need to be made and have my CPA firm do it based on the loan documents and the amortization tables.



That’s another method that could work quite well. So I’m going to say save it and close it. And let’s check it out. Check out the check from Chase, tab to the right,



we’re gonna go run and then the cash account. Now we’ve got it’s going to kind of mess us up because we kind of jumped to the end of the month here. So later on, but we got these two, that was a month later, even though it’s in the same month, but you get the idea.



The point is same amount comes out of the checking account, that’s not the issue, that it’s normal, that’s what we would expect. But if I go to the tab to the right, and I refresh it, to run it to give a fresh report, then in the interest paid, which I don’t really like the name, I’d rather call it interest expense.



But we already talked about that. I might change that later. So then we’ve got these two here, but these are different. That’s the thing. That’s what happens because interest goes down over time because the principal goes down, therefore there’s less rent on the money that you’re being loaned.



So it goes down as time passes the other sides on the loan payable. And that’s going to be down here. loan payable right there. There it is. And that one also has a difference between the two amounts in the reduction.



We’re now at the 69 878 13 which should match the amortization table 69 878 13 It does indeed do that. So let’s go back up top and that’s that’s that is that that’s the loans. We’ll touch more on loans in the future when we have another loan



Once we have to deal with two loans and get into this, and then we’ll do short term and long term loan breakout stuff in the adjusting entry section or course.



So I’m going to go to the tab to the right, right click on it and duplicate the tab. And then let’s go to the trial balance just to check our numbers together. We’re gonna go to the reports on the left, close up the bogey type in up top, the trial balance, the trial balance the balances on trial,



to trial about the balance of the nation of the get great guitars, we’re gonna go I’m going to end this at what was I doing? Maybe I can do that comparison thing here too. I’m gonna go from Oh 10123202 20 823 And then do the month months thing.



So you can see the trial balance. This is where we ended at the end of January. And now we’ve got the Feb gnomes. So if you’re fed gnomes don’t tie out then you can try to run it for the end of January and see if your genomes tie out.



And then and then if they don’t, you can change the range and see if it’s a date range issue. And if it’s not, then we’ll be running a detailed report at the end of the Feb. And then and so that hopefully helps us to drill down on any differences at that time.

Leave a Reply

Your email address will not be published. Required fields are marked *