Line-Of-Credit Account

Moving money between your primary checking account and a line-of-credit loan is best accomplished by establishing a checking account for the line-of-credit. The balances in the line-of-credit checkbook will be negative or zero.

•	Setting up the checkbook account.

1.	GO > Accounting > Banking > Setup Financial Accounts > Commands > New

2.	Assign a new Account ID #, and click OK.

3.	Fill in the requested information. The GL code should be your liability account for the line-of-credit loan.

•	Drawing on the line-of-credit.

►	If you are merely moving funds from your Line-Of-Credit Account to another account, do the following:

1.	GO > Accounting > Banking > Checkbook > Commands > Transfer

2.	From: Select the account from which you would like to withdraw the funds.

3.	To: Select the account to which you would like to deposit the funds.

4.	Check #: Make up a check number that will indicate this is something other than a regular AP check. It is not recommended that you leave this field blank or use 0.

5.	Amount: Enter the amount of the funds you would like to transfer.

Click OK

*Both the withdrawal and deposit transactions are automatically recorded in the checkbook.*

►	If you need to physically write a check from your Line-Of-Credit Account, do the following:

1.	GO > Accounting > Payables > AP Entry > Commands > New

2.	Create an AP to write the check. Make sure that you choose the receiving asset GL account for Distribution.

3.	GO > Accounting > Payables > AP Disbursement

4.	Select the correct Checking Account at the top of the screen, select the AP you just created for payment, and print the check. The withdrawal will automatically be entered into the checkbook, so there is no need to create one manually.

5.	GO > Accounting > Banking > Checkbook

Select the receiving account for the transfer, and create a deposit. Use the same date you used for the check, enter TRANS in the Type Description field, create a check number that is different than your regular AP checks (such as 9999999; do not use 0, and do not leave it blank), enter a description of the transaction in the Name field, enter the amount, and click OK.

•	Posting Interest and Reconciling the account

1.	When you receive your line-of-credit statement, you should post interest charges and reconcile the account.

2.	Go > Banking > Checkbook and select your line-of-credit checkbook.

3.	Commands > Withdraw, and enter the interest amount. Be sure to create an AP record and distribute the amount to your interest expense account.

4.	Reconcile the draws and payments just as you do your checkbook.

•	Paying back the line-of-credit

Making payments to the line-of-credit requires an accounts payable record against your primary checking account. If the payment is made by check, process it just as you would any other check. If it is made electronically, post it as a withdrawal from your primary checking and create the AP record. This payment should be distributed to the liability account for your line-of-credit.

2.	Once you have recorded the payment, you must go into Banking > Checkbook for your line-of-credit and enter a deposit for the amount of your payment.