quicken entry: How do I record a forgiven personal loan balance?

joann77f

I loaned money to someone. I forgave the balance but it is still being shown on my cash flow report. How do I zero out the loan repay without affecting my balance since the amount of the loan balance was simply forgiven, not paid?

Boatnmaniac

Ah, so the loan was set up as a category, not as a lender loan account.

You could do the following:

• Enter a $0.00 deposit transaction into your checking account register and split the category:
• Date: You can enter whatever date you want to use (maybe the last or next payment due date?).
• Payee: You can use whatever you want for this that you would find meaningful. Since you will be writing off the balance of the loan you could use your own name as the Payee.
• Line 1 of the Split: Category = loan to x; Dollar Amount = the remaining balance of the loan (a positive number).
• Line 2 of the Split: Category = Gifts; Dollar Amount = the remaining balance of the loan (a negative number).
• Lines 1 and 2 should zero each other out so the total of the deposit transaction = $0.

This method will show the total for all dates of "loan to x" category, both the loan expense and the loan payments received, now is $0. So, nothing more is owed.

It will also show that on the date of this split category transaction you incurred a Gifts expense for the amount of the loan balance.

There is another way to do this but it would involved setting up a lender loan account and editing transactions already entered into your checking account. If that is what you want to do then I can walk you through that but if I were you I would do it as suggested above.

Boatnmaniac

@joann77f - You will note a difference between @UKR 's suggestion and mine. His example assumes the checking account transaction is an expense transaction whereas I suggested a deposit transaction. Because of this:

• Gifts: His is a positive dollar amount and mine is a negative dollar amount.
• Loan to X: His is a negative dollar amount and mine is a positive dollar amount.

Either method is correct and the result in your checking account register and the categories in spending and budget reports will be exactly the same.

Boatnmaniac

Did you set up a lender loan account for the money you lent to that person? If so, enter a manual "Decrease" (payment received) transaction in the loan account register for the amount of the remaining loan balance and categorize it as a Gift expense. That should zero out the loan account and it will not affect your other account balances. It will also show up in income/expense and spending reports and in Budget as an expense as it should.

If not, how did you record the loan in Quicken to begin with?

joann77f

I paid the person's invoice and entered the check in my regular check register with the category of "loan to x". Each month when I received the check I entered it as a deposit in that same register with category "loan to x" and it reduced the balance. Now that I have forgiven the balance I need to get it out of my cash flow report. po0i98u7y6555

UKR

In that case, let's expand on @Boatnmaniac 's suggestion and create a Split category transaction in your checking account register for net $0.00, as follows:

That should, as stated, result in the "Loan for x" category resetting to $0.00 and show a real expense in the Gifts expense category because you're out some real money.

Hope that helps.

Boatnmaniac

Ah, so the loan was set up as a category, not as a lender loan account.

You could do the following:

• Enter a $0.00 deposit transaction into your checking account register and split the category:
• Date: You can enter whatever date you want to use (maybe the last or next payment due date?).
• Payee: You can use whatever you want for this that you would find meaningful. Since you will be writing off the balance of the loan you could use your own name as the Payee.
• Line 1 of the Split: Category = loan to x; Dollar Amount = the remaining balance of the loan (a positive number).
• Line 2 of the Split: Category = Gifts; Dollar Amount = the remaining balance of the loan (a negative number).
• Lines 1 and 2 should zero each other out so the total of the deposit transaction = $0.

This method will show the total for all dates of "loan to x" category, both the loan expense and the loan payments received, now is $0. So, nothing more is owed.

It will also show that on the date of this split category transaction you incurred a Gifts expense for the amount of the loan balance.

There is another way to do this but it would involved setting up a lender loan account and editing transactions already entered into your checking account. If that is what you want to do then I can walk you through that but if I were you I would do it as suggested above.

Boatnmaniac

https://community.quicken.com/discussion/comment/20356646#Comment_20356646

Looks like our response posts crossed paths a bit….and that "great minds think alike", huh? 😉

Boatnmaniac

@joann77f - You will note a difference between @UKR 's suggestion and mine. His example assumes the checking account transaction is an expense transaction whereas I suggested a deposit transaction. Because of this:

• Gifts: His is a positive dollar amount and mine is a negative dollar amount.
• Loan to X: His is a negative dollar amount and mine is a positive dollar amount.

Either method is correct and the result in your checking account register and the categories in spending and budget reports will be exactly the same.

joann77f

Many thanks! I am so glad there are bright people still out there