 QuickBooks Desktop 2023. Make Loan Payments. Let's do it within 2-its QuickBooks Desktop 2023. Support Accounting Instruction by clicking the link below, giving you a free month membership to all of the content on our website, broken out by category, further broken out by course, each course then organized in a logical, reasonable fashion, making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files and more like QuickBooks backup files when applicable. So once again, click the link below for a free month membership to our website and all the content on it. Here we are in QuickBooks Desktop. Get great guitars, practice file. We started up in a prior presentation. Going through the set of process we do every time, maximizing the home page, going to the view drop down. We got the hide icon bars, open windows, list checked off, open windows open on the left hand side. Open up the main to financial statement reports company and financial P&L profit and loss change in the range 01, 01, 2, 3 to 12, 31, 2, 3. And let's customize it so we can up that font changing it to 14. Let's bring it to 14. Okay. Yes, and okay, let's open the balance sheet now reports drop down company and financial this time the big balance sheet. And we'll customize it up top changing the range of 01, 01, 2, 3 to 12, 31, 2, 3 and fonts to the numbers to change up to 14. Okay. Yes, and okay. That's the setup process we've been doing every time. We're now going to be thinking about making a loan payments using our amortization table. So we set up our loan in a prior presentation we imagine that we had to put our loan in place. We want to remember there's a couple just logistical problems with regards to the loan. One is that we might have multiple loans. In that case, I would recommend having one overarching loan payable account, multiple other loan accounts tying out to each individual loan that you can then tie out each of those accounts to the, the amortization table in a similar fashion as we will do here with what we're considering just the one loan that we have on the books. The other one being that you might have a short term and long term portion to the loan as we do in our example loan here, given the fact that we're imagining this is a five year loan. Therefore, it's going to have a short term portion because it's an installment loan being paid off in monthly payments. That being the 12 months out from whatever current date we are in. And then there's a long term component to it. Now, I don't want to break out the short term and long term every time I make a payment because to do that will be quite tedious. What I want to do instead is have a one loan account for each loan that I can then tie out as I make the payments. Another problem that comes up is that as we saw when we made the amortization table, there's going to be three accounts impacted every time we make a payment. The checking account is going to go down by the same amount if it's an installment loan with equal payments. But there's going to be interest and the loan payable interest representing in essence the rent on the loan. And then the loan payable is or the loan reduction amount is going to be the amount that reduces the actual loan balance. And those those amounts will change each time. That makes it difficult for us to memorize a transaction, whether we're doing the data input each time manually or whether we're using bank feeds. It makes it difficult to do that process. So there's a couple ways around that process or to make this as as automated as possible. So for example, if you were using bank feeds and you and you want to just try to memorize the transaction, you might say, hey, look, I'm not going to account for the interest portion every time I make a loan payment. I'm going to tell the bank feed just to hit the loan payable account. That will mean that it's not correct exactly when I do the transactions each time I make the payment. But then I can go back and make a periodic adjustment or possibly have my accountant or CPA firm make periodic adjustments allowing me to automate my system using simply bank feeds and then breaking out the interest portion periodically at the end of the month or the end of the year by using my amortization table to then to then break everything out. That's one way that you could approach this to try to automate your bookkeeping system or you can try to every time you make a payment tie out to the amortization table, which is what we will do here. So what we're going to do is we're going to make actually two payments. We're going to make pretend that we're going to make this first one here and we'll do it at the beginning of the month. And then we'll imagine we jump to the end of the month and we'll make this second payment just to see what the difference is between the two to highlight some of the issues. I'm going to highlight this first one up top. That's the one we're going to work on. Let's make it green so I can focus in on that. I can go back to the to the homepage. Now this is going to be a normal kind of transaction, which we might do with basically just a check type of form. Remembering that the check form is the form that would be used whenever we're decreasing the checking account, whether writing an actual check or possibly even using an electronic transfer. If you did use an electronic transfer to pay the loan automatically, you might be using bank feeds to record it, but the bank feeds will still be using typically a check type form. I just mentioned the bank feeds just to know where they might fit in. We have another whole another course or a whole another section on the bank feeds. Let's go into the check here. We're going to say I'm going to pretend that we are loaning this from the slave. This is as of 020122. We're going to make this as of and I'm going to say this is for Chase. And so Chase is going to be the bank that we're paying that we already set up. And then I'm going to enter the amount that we're going to pay, which is going to be the amount of 135873. And I'm going to say this is going to be 1358.73 tab. Also just realize just so we know if I go to the balance sheet, you'll recall when I did the data input. So I double click on this that we had, if I bring this from 010122, that we had the 22,000, the beginning balance, and then we added the 50,000 in a deposit in our practice problem. But at this point in time, we basically just want to imagine that we have one loan that we took out, which is now where we refinanced the loan, let's say at the 72,000. And we're imagining now that the first month payment is due at this point in time, possibly thinking of it as the January payment that we're recording for the first day in February. So that's the scenario in terms of our practice problem. Let's go back to the right checks and we're going to say we're on the expense side. We might in the memo say that this is the first payment or something like that on the amortization table for a memo. We're going to say that the account is going to be then we have an interest portion and the principal portion. So let's go to the interest first. Let's see if there's an account for interest. So they do have an account here already set up for us. So I'm going to use that account that they have. That's our typical strategy for QuickBooks to use the account that the system gave us when we set up the QuickBooks. Now I might adjust that because I might want the interest as not an expense account but an other expense. So we'll talk more about that later. The other amount is going to be reducing the loan payable and that's going to be then for the difference. So there's 300, this should be 300. And then the other side, if I didn't, if I had fixed that before, like if I tab to the next line, it'll try to calculate the missing amount to be in balance. I'm going to put that up here, 105.73. I'm going to delete this and I'm going to show that there it is right there. Now when I record this, what's going to happen decreased to the checking account for the amount that we're going to pay, 1,358.73. The other side going to an income statement account 300 for the interest, which is in essence rent on the borrowing of the money. It's going away just like rent on an apartment or something like that. And then the loan balance is going to go down by the 1,058.73, which should bring the loan balance to the amount on the amortization table, 70,941.27. Let's check it out. Let's save it. Let's close it. Let's check it out. If I go to the balance sheet, double click on the good old checking account. We're going to see there is the amount. Where is it? I need to make this for the hold on a second. I put it in there for 2022. Didn't I? Let me fix the date. Check. I did. Dang it. It's 2023. I'm working in the future. I'm going to change that to 23. Let's do it again. Let's save it and close it. And so there we have it. So now there it is. That looks right. Closing this back out. The other side is then we could think of the profit and loss, the P and L. And so the profit and loss. We could have interest expense. There's the interest expense. If I run the P and L just for the month of February, then it'll be a little bit. That'll be like the only thing there, right? Oh, two. Oh, one 23. So there's the, there's the activity that's happened just for the month of February that one transaction thus far. And then the loan balance back to the balance sheet is going to be here. The balance is now at 70,941 27. There's the 70,941 27. If I double click on that, then I get back to the amount that was decreased, the 5,000, the 1,058,373, which matches this loan decrease. All right. Now let's do it again. Now we're going to imagine we're jumping forward in time a month later. We're going to still enter it into QuickBooks as of February because we're now going to imagine like it's the end of the month, right? So I'm going to make this second one here because I want to emphasize the difference between the two, which causes the problem of us not being able to memorize these transactions and having to use the amortization table or come up with some system to do the data input process. So let's close this back out and let's pretend a month has now passed. We're going to enter it as of the end of February, the next payment. So I'll go back to the homepage. We're going to go into the enter a check. So I'm going to enter a check and we're going to say this is, that looks good. And this is going to be as of 022822. So we jumped to the end of the month and say, and this is Chase. And then, and we will go back to the, to enter some data within the month again. So we're kind of jumping forward in the practice problem to demonstrate the two loan payments side by side. I'm going to change the memo to say this is the second payment. And then the interest portion. See how it tries to memorize it down here. If it was a bank feed, you might be able to set up a similar memorization process. But the fact that there's three accounts affected can kind of make things a little bit more confusing. And you can't just memorize it because this amount is changing now for the second payment. It should now be 295 59. So it should be 295.59. And then the loan reduction should now be the 106 314 So 106 3.14. If I tap through and it doesn't come up with a plug number down here when I tap through, then I can see that it's in balance, meaning this plus this should equal the decrease in the checking account. So you can see how that's, that's kind of an issue for us memorizing the transactions. Now note again, one way you can fix this if you try to automate your transactions, possibly using bank feeds is that you just put the whole other side to the loan payable ignoring the interest for now. And then periodically in the adjusting entries process at the end of the month or year, either you as the bookkeeper or your as an accountant or the CPA from the tax preparer, you give them the amortization tables and say, hey, you now fix tie into the amortization table as of this point in time, adjust the interest to what it should be at that point in time. And that's again a way that you can kind of automate the process, possibly making your bookkeeping as easy as possible, and possibly periodically yourself or working with someone else who's doing periodic adjustments for tax preparation and or financial reporting to adjust any loan balances to the proper table. So that's just a strategy you might want to keep in mind. So what's this going to do? It's going to decrease the checking account by this amount. The other side is going to go to the interest, which is just going to go away because it's interest expense, it's rent and essence on the purchasing power. It's going to decrease the loan payable loan balanced by the 1063 14, which should end with us matching this 69 878 13. So I'm going to say, okay, let's save it and close it and check it out. Balance sheet. We can see the checking account double clicking on it. If I got the date right this time that I didn't, I put it in 2022 again for goodness sake, man. It's just ridiculous. Just screw your head on right something. You're messing this whole thing up. Everyone's getting confused. But now you can I'm going to go back in here and make this a 23 because I'm working in the future and then say save it and close it. Okay. So there it is. Hopefully there it is. Notice these two are the same amount that's decreasing the checking account because the payment that's decreasing the account is the same. However, the amount allocated to the loan payable. If I go down here to the loan payable double clicking on it differs and now the ending balances at the 69 878 13, which should match here 69 878 13 looks good. Closing this back out. Go into the profit and loss. We've got the interest expense double clicking on it. It has changed on the two checks. So that's that's those are the kind of the issues that come up with the loan payable. So if I go back to the balance sheet, just realize also that if I had this broken out between short term and long term accounts, then you could see that it would be difficult as I make the payments to tie it in to the amortization table each time I would have to figure out what the short term and long term portion of the loan is after each payment on a monthly basis. You don't typically want to have to do that. You typically want to do that periodically at the end of the month or year because it's not really worth your time typically to be figuring that out each each step or each payment. That's why we do the adjusting entries processes so that we have some things that we do periodically so we can make the financial statements correct as best as possible as of that point in time for reporting purposes for taxes for decision making purposes. And then the rest of the time we do what's easy to make the bookkeeping as easy as possible as automated as possible and so on. So there is that. Let's open up the trial balance to just see where we stand at this point in time by going to the accounting taxes, the trustee trial balance. I'm going to make this from 010123 to 123123 for the full year. Let's customize it up top with the fonts and numbers changing it up to 16 to give us a good view of it. Notice that the trial balance you can't really run the trial balance just for the month of February so be aware of that as we saw with the income statement. With the income statement you can run it as of just February to see just that activity or you can do it from January to February to see everything that has happened through that time frame. But for the trial balance because you have both balance sheet and income statement kind of on the on the trial balance the income statement down here is usually reported kind of on a yearly basis. So you can see if I if I change this to February then it doesn't change the bottom line here because the trial balance kind of the way QuickBooks works is it has its own rollover process or closing process built in on a yearly basis. So we'll say this is going to go from January to December I'll say which is only two months of data input over just starting the second month. So here's where we stand at this point in time. If anything doesn't tie out then you could change the dates and I demonstrated that there's often a date issue especially when you're not working in real time is your problem and I totally did that on purpose so that you can see that that's typically the case and then you could drill down on it and fix that and at the end of the month we will do a transaction detailed report to consider any other problems and find them using that report.