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Loan Account (Opening Values)

Question asked by Richard Cook 5 years ago

Morning!

I have a loan for a laptop, all direct debit payments come out of our business account.

Am I right in thinking I should create an account for this loan and treat all payments as an account transfer? In this case, should the opening balance of the loan account be the total loan amount as a negative value? Finally, I understand I can make journal entries to calculate the interest?

Thanks all

4 Replies

Hi Richard

  1. Create a new loan account (under the add bank account menu).
  2. Create a bill for the laptop.
  3. Pay the bill from the loan account.
  4. Treat the monthly payment as a transfer between bank and loan
  5. Adjust either monthly or annual to reflect any interest (if applicable)

Can you add the laptop as a capital expense and depreciate it from day one even though you are paying off the loan for it?

Hi Alan,

Yes, this would be the correct way to process the asset.

Thanks,

Tommy

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