I have an interest-only loan to record on the balance sheet? What journal entry would capture this activity?

DR?
CR Long-term liability

Thanks!

If it is a mortgage - Notes Payable... Bank... & Expense the interest each month

If you're meaning how do you record the payment of the interest, the credit is to cash, not a liability.

If you're accruing interest as an adjusting entry that hasn't been paid yet, then it goes to Interest payable, not notes payable. Interest is not a note.

But you did say which it is.

Quote:

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Originally Posted by mcclabg

I have an interest-only loan to record on the balance sheet? What journal entry would capture this activity?

DR ??
CR Long-term liability

Thanks!

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Credit Notes Payable but what's the debit?

The interest expense, like mltsara said. She got that part right -- I was just correcting the note payable thing.

Even if the repayment plan is set up as interest only, isn't there still a principal amount that is due as a long-term liability perhaps? For example, what is being paid for? If the company was loaned money, then someone would record a debit to cash and credit to loan or note payable, probably a long-term liability.

If the company bought equipment, then you would debit fixed assets and credit some sort of long-term liability.

Then, as the interest only payments are made, there would be a debit to interest expense and credit to some payable account or cash-with no impact on the principal balance.

Then, typically, a balloon payment (partial or in full) would typically be due on the principal balance at some point specified in the loan agreement.