How to record journal entries for loan-related transactions? (Business Loans, Employee Loans, Loan Repayment, etc.)

Let's see how you can record journal entries for loan-related transactions on Refrens.

Step 1: Create Ledger Account

Navigate to Accounting > Chart of Accounts > Create New Account:

Once you click on “Create New Account”, a pop-up form will appear:

In this form, add the following details:

1. Account Name: Add the account name according to the type of loan. For example, business loans, employee loans, etc.

2. Account Group: Select the respective accounting group from the drop-down.

3. Opening Balance: Add the opening balance.

Once done, click “Submit.”

Step 2: Record Journal Entry  

Navigate to Voucher Books > Open Journal Voucher Book > New Entry:

1. Journal entry in case of a loan taken by a business:

• Debit: Bank/Cash A/c
• Credit: Loan A/c

2. Journal entry in case of a loan taken by an employee:

• Credit: Cash/Bank A/c
• Debit: Employee Loan A/c

3.  Journal entry in case of loan repayment:

• Debit: Loan A/c
• Credit: Cash/bank A/c

That's it!

If you still have questions, reach out to us at care@refrens.com or contact us via live chat support for quicker assistance.

Updated on: 10/07/2025