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Question: My boss had several equipment loans that are in various states of being paid off. He recently got a bank loan to pay off all the smaller equipment loans (financed through other institutions). My question is this rounding money amounts off:
"Excavator" loan was originally entered into QB for $50,000 on day 1. Making payments, it came down to $15,000 owed. We got a payoff letter which said "the payoff is $10,000" so the new bank paid it for us zeroing it out. So, I enter into the journal entry that NEW loan paid the $10,000, however, QuickBooks naturally still now shows that the amount remaining to be paid is $5,000. We obviously don't owe $5,000 because we paid it off early. How do I get rid of the $5,000 to zero the QB account out? What account does it go under? Retained earnings??? Do I create a new category? It's not really interest because we never paid it...it's not really income because we never took money in. I'm confused. Please help!
"Excavator" loan was originally entered into QB for $50,000 on day 1. Making payments, it came down to $15,000 owed. We got a payoff letter which said "the payoff is $10,000" so the new bank paid it for us zeroing it out. So, I enter into the journal entry that NEW loan paid the $10,000, however, QuickBooks naturally still now shows that the amount remaining to be paid is $5,000. We obviously don't owe $5,000 because we paid it off early. How do I get rid of the $5,000 to zero the QB account out? What account does it go under? Retained earnings??? Do I create a new category? It's not really interest because we never paid it...it's not really income because we never took money in. I'm confused. Please help!