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• # 83101
• Thu 07 Jun 2012 07:32 PM

Hi All


Sorry to ask what is probably an obvious question, however, I have been through all my training material and can't find a definitive answer.

My question is, can loan repayments (basically a family loan to start a business up) be recorded on the T,P & L a/c under expenses?
All I can find is reference to loan interest.  There is no interest, but my client is now starting to repay the loan.  I understand how to record it in the general ledger and the balance sheet, but am unsure if it can be recorded in the T,P & L.

Many thanks in anticipation.

Kind Regards


Jac695         

• Jac695
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• # 83102
• Thu 07 Jun 2012 08:39 PM

No – it’s a balance sheet transaction.

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• # 83103
• Thu 07 Jun 2012 08:42 PM

... pressed ‘send’ too soon! Interest would indeed be a P&L item (the cost of the loan), but the loan is simply a balance sheet liability which is gradually reduced as it is paid off.

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• # 83107
• Thu 07 Jun 2012 09:21 PM

Thanks Danya.

Much appreciated - just wanted to make sure I was doing the correct thing.

Kind Regards    

• Jac695
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• # 83108
• Thu 07 Jun 2012 09:28 PM

No probs

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• # 83128
• Sat 09 Jun 2012 07:48 PM

Hi Jac,

To Account for the receipt of the loan through the bank

Bank B/S                                                    DR
Loan - Long term loan as liability B/S        CR

To account for the interest paid

Interest paid  P/L DR
Bank               B/S CR

Hope it helps,

Nathalie

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