Loan Repayments

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  • Updated 1 year ago
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Hi there, I am trialling Reckon One and want to know how to record a loan repayment.  I entered a loan repayment as an expense account but it doesn't come off my loan which I made a liability account.  If I put the payment against the loan account it comes off  the loan amount but doesn't come off my bank balance????  Any help with this is appreciated.  Thanks 
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Alicia

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Posted 1 year ago

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Kevin Russell, Accredited Partner

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How have you set up the liability? You know you can post a cheqie direct to the liability account. Dont forget to post the interest to the expenses account.

Call me if you get stuck

Kevin 0407744914
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Michael Corrigan

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You need to set up the liability account for the loan first. Then you can do a transfer from the bank account to the loan (liability). When interest is charged, then you include that as an expense for the loan liability account.
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Alicia

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Thanks for your help.  I have set up the loan as a liability in the Chart of Accounts.  Is this correct?  Or should I open it as a bank account liability?
(Edited)
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Kevin Russell, Accredited Partner

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Yes its correct. Do you have an accountant?
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Michael Corrigan

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If it is with a bank then set it up as a bank account liability If not set it up as a liability
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Alicia

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As far as I can tell I have set up the loan properly and when I make a payment I am posting to the liability account and its coming off the loan total but its not showing as an expense?
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Kevin Russell, Accredited Partner

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When you make a payment part of it will be principal and part of it interest. The finance Coy should have given you a repayment schedule. Theres a thing called the National Credit Code.
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Alicia

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Thank you, I really do appreciate your help but I don't think I'm explaining myself too well.  I've made a payment and posted it against my loan (liability) when I check the banking it shows as a payment and the bank account balances.  When I run a P & L it doesn't show up as an expense therefore giving a different balance.  Having said that, when I run a balance sheet it shows the payment has reduced the amount of my loan.   Hope this makes sense. Thanks again
 
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Michael Corrigan

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The loan repayment is not an expense by itself It is the interest that is an expense.
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Kevin Russell, Accredited Partner

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Thw loan repqyment will never show up on the profit and loss statement.
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Alicia

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Ahhh thank you, that is what was confusing me as I assumed it would be an expense as its coming out of my account.  Thanks again for all your help Kevin & Michael :)
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Kevin Russell, Accredited Partner

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Alicia you REALLY need an bookkeeper or a accountant
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Alicia

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Thanks Kevin, I have a very small online business that is more like a hobby, the loan is a small amount of money I lent to the business to get started so there is no interest and if it doesn't get repaid it doesn't matter.  I don't take a wage I just do it for fun.
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Michael Corrigan

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If you are a sole trader, then it is not really a loan rather an equity injection. If you have a company or trust then it would be a loan
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Alicia

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Thanks for the info, I will look into that :)