How to reconcile a Loan payment coming out of my bank checking account

Gautam

Hello,

I have a $105 loan payment made out of my Bank checking account. I have a liability loan account setup in my chart of account for $5000 loan that I am paying every month with principal + Interest ( $100 +$5= $105), When I see the entry in my bank transaction in wave, how do I categorize/ transfer to my loan account reflecting that $100 goes to pay my principal and $5 goes to pay interest as expense?
Any pointer is appreciated.

Mikeg

@Gautam,
Apply the payment to the loan. From there you will need to do a journal entry to move the interest portion of the loan payment. It should look like this:
Debit Interest Expense 5.00
Credit Loan Payable 5.00
(To post interest on loan payment)

Transaction account balance
Loan Payable ( 5000)
Payment 105 (4895)
Interest Exp -5 (4900)

Gautam

I think, I was try to avoid any journal entry!
So here is what I did:
In my Transaction list. for a payment of say, $200 ( Princ: $190 + Int: $10) I split it like that and transfer that $190 in my Loan account and showed the $10 as interest expense. See the screen shot.
I then looked at my Loan account and it correctly reduced my loan balance by $190!!

Mikeg

@Gautam,
That is correct. Wasn't sure how you had the loan set up on the liabilities.