How do I record a Loan Receivable?
Loan Receivable is when someone owes you or your company/business money. Its a loan that does not use a bank or an outside lender. When you lend money you create an asset to yourself.
This is a 3 step process:
For the purposes of illustration, we will use the example of a loan to a family member. A family member borrows $10,000 and agree to pay back $200 per week.
Step 1: Setup a Asset (Loan) account:
Note: If you are using Cashbook Platinum, the Reporting Group will most likely be 7-730 Other Current Assets.
Step 2: Setup an Other Expense Account.
Step 3: Setup an Other Income Account.
For information on how to record the initial loan transaction and loan repayment transactions click here.