This post addresses entries to make in the books when a PPP loan has been forgiven, all or in part. As PPP forgiveness for Round 1 starts to roll in, we need to move the PPP loan off the Balance Sheet and onto the P&L in QuickBooks.
The Consolidated Appropriations Act 2021 (CAA 2021), which was passed on December 27, 2020, provides many of the answers the country was waiting for regarding the Paycheck Protection Program (PPP) in particular. In recent days myriad articles have been written and webinars hosted detailing the key features of CAA 2021 and the second round of PPP.
This post does not address those details, but instead offers some suggestions on how to enter the loan forgiveness information into QuickBooks.
Scenario 1: PPP is Forgiven 100 Percent
If you followed the prevailing advice at the time that PPP loans came out, you posted the PPP loan to the Balance Sheet as a Long Term Liability (or Other Current Liability), named the loan account something like “PPP Funds Received,” and deposited the funds to your newly opened PPP Bank (or the regular Business Checking).
Using a Journal Entry, Zero Dollar Check or a straight deposit, the resulting entry to record the loan was:
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Jody Linick, an AIPB Certified Bookkeeper, QuickBooks Certified Pro Advisor and member of the Intuit Trainer/Write Network, heads up FitBooksPro which specializes in helping professional services providers set business goals, and using the tools available in QuickBooks Online, to manage...