are you generous enough to lend money to family or friends
well then you should watch this video about how to record that in your home finances
if you have any questions about this topic you can leave them in the comments section below
and i'll do my best to help you and of course if you feel the video helped you i hope you will
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if the condition is lending money to a family member or a friend it means that you are not
charging interest to this family member or friend and you are not requiring identical monthly
payments on time every time until the loan is paid off if those two conditions are true then it's
more like a business loan than an informal loan and if you have either of those two situations
in your loan then i suggest that you simply use the method in the video called quickbooks for
a finance company and i have included that video at the end of this playlist you see
this situation is much easier all you have to do is create a current asset type of account and you
can even name it loan receivable to mr this one or so and so or whoever simply record the check
or the payment to that person in the amount of the loan that you're giving and then use the
current asset account that you just created at the bottom of the check it's that simple
for example let's imagine on june 29th we loaned our friend danny deadbeat a thousand dollars
for a one-time emergency that was vague and could only be solved by you lending him money right now
now before we predict the results i'm going to ask all of you in the audience to be a
little patient with me and bear with us you see this video is an add-on addendum to the course
because i didn't think that that many people loaned money to family and friends
so our example is before all of the advanced transactions that you might have recorded in the
advanced section so we want you to just watch quickly to get the idea because it really is
amongst the most simple things that you would do in the course so what will happen
in the trial balance if you lend a thousand dollars to your good friend danny deadbeat
well if the money came out of chase bank then chase bank would decrease by a thousand
and become a thousand and of course the current asset that you would create receivable from danny
would show up for the first time in the trial balance as a thousand dollars and because
we're advanced at this point we can create the account at the moment that we write the check
now in the home finance course we're using the registers so for using the chase register
we click here and all we have to do is put the date and the date was june 29th of 2016
and the amount that's coming out of our bank account is and of course you can put all the other
details that you like but you don't necessarily you can put danny on the name of payees
ad new he's basically a customer because he owes you money
click ok but the most important is the account
you can scroll up and click account new and this will be other current asset loan
receivable
to
danny click save and close and when you record the transaction
you can open up the trial balance and see the numbers are exactly as what we expected
loan receivable to danny is a thousand dollars and cash in bank went down to a thousand dollars
now in this situation danny is allowed to pay what he can whenever he can and when that happens
simply create a deposit for each payment he would make to pay off the loan in the deposit window or
in the register use the same current asset account that you used to record the loan for example
let's imagine on july 4th of 2016 danny gave you four hundred dollars to pay off some of the loan
now what will happen in the trial balance well if he gave you 400 that means the loan would decrease
from a thousand dollars as its balance to six hundred dollars as its new balance because he
just paid off 400 of that loan and because the 400 is deposited into the chase bank chase bank
will increase and become 1 400 so we open up the chase bank register we put in july 4th of 2016
and of course it came from danny the deadbeat and it's still loan receivable to danny but this time
it's a deposit it's a deposit into chase bank of 400 which means you can see the balance went up
but really you should open the trial balance and confirm that chase bank went up to 1400 because
the loan receivable to danny went down to 600. and you could always double click and show danny
every transaction regarding the loan hey danny on june 29th i gave you check number six for a
thousand dollars from my chase bank but then on july 4th you gave me 400 that i put into my chase
bank to lower the balance of the loan so this is plenty enough if you lend money to a friend
you