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Entering in interest for truck loan

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Catie_Panoss
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Entering in interest for truck loan

Hi there

We got a bank loan and purchased a truck for the business. I have created a 'long term liabilities Account' and called it 'Truck loan'. I have also set up an allocation rule, so that each week when we make a payment, it automatically puts it into this 'truck loan' account. However, it hasn't been recording the monthly interest we have been paying on the bank loan. How do I put that into MYOB?

Cheers

Catie

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MYOB Moderator Liam_M
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Re: Entering in interest for truck loan

Hello @Catie_Panoss

 

I apologise for the delayed response too your forum post.

 

To record interest go to the cog menu and select 'general journal.' Here click 'create journal.' This will bring up a blank journal. Add two lines to this journal. The first should credit the loan account by the amount of interest being charged. The second should debit an expense account for tracking interest for the same amount. If you don't already have an expense account for interest you can create one.

Kind Regards

Liam
MYOB Client Support
Contributing Cover User Den7
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Re: Entering in interest for truck loan

Hi Liam,

I am also attempting to use this method but when i credit my loan account via Journal entry it actually increases the amount I owe instead of reducing it.

I use a loan account in liabilities

Please help....
MYOB Moderator Liam_M
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Re: Entering in interest for truck loan

Hello @Den7

 

The journal entry is supposed to increase the balance of the loan. To be clear. this isn't the transaction to record you paying off the interest. This is a separate transaction to record the interest that has accrued on the loan.

 

When you first setup the loan, you're only recording that you owe the principle (not any interest that is added over the period of the loan). AccountRight doesn't automatically add interest to the loan, so you need to record a transaction to do that. This transaction is separate to the transaction for your repayment, which could just be recorded as a spend money transaction allocated to the loan account.

Kind Regards

Liam
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Contributing Cover User Den7
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Re: Entering in interest for truck loan

Hi Liam,

 

That makes sense now....

 

Can you please clarify the following regarding my chattel mortgage?

 

I pay $1050 p/m on a lease for a vehicle, currently at month 52 of 59 + residual on the 60th month

 

My schedule currently shows around $850 principal + $200 interest = $1050

 

I have about $27000 still owing under "current liabilities"

 

How can I reduce the 27k by $1050 per month and record the interest component somewhere else?

 

Is that possible?

 

Cheers

 

 

MYOB Moderator Liam_M
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Re: Entering in interest for truck loan

Hello @Den7

 

You could just record a spend money transaction for the full $1050 and allocate it to the loan account (to reduce the balance) and record a separate transaction to cover the interest as above.

 

Or, as an alternative, you could record a single spend money transaction for $1050 allocating $850 to the loan account and $200 to an interest expense account. Both would work. Speak to your accountant about which method would work best for your business.

Kind Regards

Liam
MYOB Client Support
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