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Loan Origination & Payment Tracking

This guide explains how to record a new loan in Puzzle and properly track loan payments over time using a liability account, split transactions, or a month-end journal entry (MJE).

Written by Michael Herchen

Use this process when your business receives a loan and needs to:

  • Record the loan proceeds

  • Track the outstanding balance as a liability

  • Record payments that reduce principal and recognize interest expense


1) Loan Origination — Create a Liability Account

Step 1: Create a Loan Liability Account

In Puzzle, create a dedicated liability account for the loan via Chart of Accounts and selecting the + Add Account button and selecting Parent Account
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Recommended naming format:

  • Loan Payable - [Lender Name]

  • Example: Loan Payable - Chase

Account Type:

  • Liability

Account Category:

  • Notes Payable

2) Record Loan Proceeds to the Liability Account

When the loan funds hit your bank account, Puzzle will typically pull in a bank transaction (or you can add one manually).
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Step 2: Categorize the Deposit

Find the incoming deposit and categorize it to your new Loan Ledger, this will automatically create a JE that:
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✅ Debits: Bank / Cash account
✅ Credits: Loan Payable (Liability account)
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Result:
Your cash increases, and your loan balance increases under liabilities.
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3) Record Loan Payments — Reduce Liability + Split the Transaction

Loan payments usually include:

  • Principal (reduces the liability)

  • Interest (expense)

  • (Optional) Fees (expense)

In Puzzle, you can record this in one of two ways:
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Option A (Best for Ongoing Bookkeeping): Split the Payment Transaction

Step 3A: Split the Loan Payment

Locate the payment transaction from Transactions > Bank & Credit Card (the outgoing payment), select the transaction so it opens into drawer mode and select "Split"
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Split it into multiple lines:
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Example Split

If your monthly payment is $1,000:

  • $850 principal

  • $150 interest

Record as:
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Line 1 (Principal):

  • Category: Loan Payable - [Lender] (Liability)

  • Amount: $850

Line 2 (Interest):

  • Category: Interest Expense (Expense)

  • Amount: $150

Result:

  • The liability balance goes down by the principal amount

  • Interest is correctly recognized as an expense

Option B (Best for Month-End): Use an MJE Based on Statement or Amortization Template

If you prefer to keep payments coded simply during the month and clean it up later:
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Step 3B: Book Month-End Split via Journal Entry (MJE)

Use the lender’s month-end statement or our amortization schedule template to determine the correct principal vs interest split.
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Create an MJE by heading to Accounting > Manual Journal Entries to make a monthly loan adjustment:

Monthly Loan Adj — Recognize Interest Expense

  • Debit: Interest Expense

  • Credit: Loan Payable

✅ This method is ideal if:

  • You want consistency month-to-month

  • You reconcile using a statement-driven process

  • You already maintain an amortization tracker


Best Practices / Notes

  • Always confirm the principal vs interest split from the lender statement or amortization schedule.
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  • Create one liability account per loan to keep balances clean and easy to reconcile.
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  • If there are fees, include a third split line (e.g., Bank Fees or Loan Fees Expense).
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