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How to enter a loan received for a perticular expense
The entry I made was, DR- Cash and CR- Loan Payable,
When the loan is paid it would be, DR- Loan Payable and CR- Cash. I also need to make an entry to record the Assett the loan was for at the time the loan was received , which is, DR- Assett Acct and CR-?? What do I credit?? |
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Did you actually receive cash or did you sign a loan and receive the asset? I would guess the latter, in which case the entry is to dr the Asset and cr Loan Payable. If you actually received cash, you have two entries: Dr Cash, cr Loan Payable upon receipt of the cash. You then turned around and used the cash to buy the asset: dr Asset, cr Cash In paying the loan, you would generally have payments. Part would be interest and part would be principal payments. You would dr Interest Expense, dr Loan Payable, and cr Cash. |
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