How do I set up an existing bank loan?

Georgie_8281276 Member Posts: 18
I have an existing loan that has never been entered correctly - the
whole P&I amount has been put in as an interest expense every month, and there is no reflection of the liability at all in the balance sheet. I'd like to draw a line in the sand at say January 1st and enter the repayments correctly from then on, and correctly show the liability at that date, and ongoing.  I'm not very experienced with general journal entries! Thanks.


  • DebonAir
    DebonAir Member Posts: 393
    edited May 2017
    I have my loan repayments as a cheque, see pic.
    The Principal amount goes to a Long Term Liability account, the Interest goes to an expense account.
    You could do the same with a journal, with a credit to the bank account and debits to the other accounts.
  • DebonAir
    DebonAir Member Posts: 393
    edited January 2017
  • Jacqui Allen
    Jacqui Allen Member Posts: 238 ✭✭
    edited January 2017
    I would bring your accounts in line with the accountant as at June 2016, this will then show the correct figures as at that date. You can do a journal for Jul-Dec 2016 or modify the transactions from that period, I prefer the latter as the accountants like to see detailed transactions.