Good Afternoon,

Any help is appreciated! We payed off a commercial loan early which left a balance in my account on quickbooks. How do I adjust that off? Journal entry? Do I credit interest expense account?

Thank YOU!!

Good Afternoon,

Any help is appreciated! We payed off a commercial loan early which left a balance in my account on quickbooks. How do I adjust that off? Journal entry? Do I credit interest expense account?

Thank YOU!!

When you paid off the outstanding loan there should have been a credit balance in your notes payable account equal to the principal outstanding on the loan. Your payoff amount should have been equal to your outstanding principal plus any accrued interest since your last payment. For example say your principal balance was 100,000 (this should have been the amount in your notes payable also), the payoff was quoted at 102,000. The journal entry to record this would have been:

Db Notes Payable for 100,000
Db Interest Expense for 2,000
Cr Cash for 102,000

Now you are saying you have a balance left in your notes payable (loan) account that should be a debt balance (as it seems you posted the entire payoff to notes payable. If this is the case you need to credit notes payable (loan) and debt Interest expense for the amount left on the books.

If you have a credit balance in notes payable something was entered wrong.