how to record 3rd party loan payment (2024)

Hello,BluebirdBookkeeping.

Thank you for getting back to us. I have steps to help you adjust the payment reduction in the loan principal in QuickBooks. Let's create a clearing account.This way, you can move money from one account to another account. This account normally has a balance of $0.00 because you always take out the same amount that you put in. It may also be called aBarter or Wash Account.

To set up a clearing account:

1. From theListsmenu, selectChart of Accounts.

2. ClickNewfrom theAccountdrop-down list at the bottom.

3. In theAdd New Accountwindow, select theBankradio button.

Below are the reason why you need to choose bank account:

• You can pay into a bank account via Receive Payments or Make Deposits.
• You can pay out of a bank account via Write Checks or Pay Bills.
• A bank account appears on the balance sheet and on the statement of cash flows to balances and changes in balances.
• To allocate expenses to overhead or class using a zero check, you must use a bank account as your Clearing account.

4. ClickContinue.

5. From theAccount Namefield, enterClearing Account.

6. Take note that doNOTenter an opening balance.

7. HitSave and close.

To use a clearing account:

1. Create a journal entry.
2. Add the AR or AP from which you are moving money.
3. Add the Clearing account.
4. Save the Journal Entry.
5. Create a second Journal Entry.
6. Add the Clearing Account.
7. Add the AR or AP account to which you moving money.
8. In either Pay Bills or Receive Payments, link the Journal Entries together.

Here's an additional reference about this type ofaccount:Set up a Clearing Account.

I also suggest consulting an accountant to make sure the recording is accurate. You can as well ask for further guidance regarding the categorization of the accounts.

Please know that you're always welcome to post if you have any other concerns. Wishing you and your business continued success.