How do you setup a receivable i.e...notes receivable?

Ron Stevens

How do you setup a "note receivable ?

jacobs

1. Create a new Asset account; call it "Loan to Bob" or whatever you want.
2. If you are receiving interest on the loan, create a Category called "Interest Earned" or whatever you want; make sure you click the button to define it as an Income category.
   
3. In your checking account (or whatever account you took the money out of), record a payment to whoever you loaned money to. This transaction has no Category, but is a Transfer to your asset loan account.
4. When you receive payments on the loan, you can enter them in your checking account as deposits, again, as a Transfer to your asset loan account.

Your Asset loan account always reflects the balance you are still owed, and the register contains the history of the loan origination and all transactions made.

If you are receiving interest on the loan, when you record each deposit in your checking account, instead of just being a transfer to the Asset account, make the transaction a split: one split line is the amount to Transfer to the Asset account for principal repayment, and the other split line is amount of interest income, for which you will choose the Interest Earned Category you created.