I have received a loan from a bank for £2600 for equipment, with interest payable over 36 months the total I will pay back £2897.86.
I have created a loan account but should the opening balance be £2600, £2897.86 or should these be minus figures? If I keep them as a positive figure, they show up as an “asset” on my balance sheet and I assume it needs to be a liability. If I put them as a minus number then when I “transfer” the payment I actually received from the loan company of £2600 in to the current account, the balance of the loan account shoots up to over £5000. Can you please advise how I log this loan please?
If I am paying back £80.50 a month, this is a mix of capital and interest. If I am them tagging it as a payment “out” of the current account and “in” to the loan account, then the interest paid just gets lumped in with the loan. Is this correct?
Any help very much appreciated.