You would not do it the way it was explained by the previous responders!!
"Other Income"-reference is more like it. Never Cr. Equity in these types of situations (new)!
Explanation:
Non-Taxable funds in: this is the payment made on your behalf by SBA.GOV.
Step One:
Is set up as:
in your Chart of Accounts set up a "Other Income" account, Name it as: "SBA CARES ACT Non-Taxable Income."
Step Two has two parts, one for the Principal Amount and the second for the Interest Amount:
Part P ("P" is for Principal):
Should already be set up as either a Long-Term Loan (over 12 months to pay back P & I), or it was set up as a Current Liability (12 month or less to pay back P & I).
Your "loan" that SBA.gov is making payments toward should be the loan you already had set up in QuickBooks, which qualified under Section 1112 of the CARES ACT. You should have received a letter of acknowledgement of this from your "Lender."
Part I(Part I is for Interest Expense):
You would have an Interest Expense Account previously set up in QuickBooks.
Step Three:
The Journal Entry (J/E):
Dr.(Debit) the existing loan for the principal payment amount
Dr. (Debit) the interest expense account for the interest payment
Cr. (Credit) the SBA CARES ACT Non-Taxable Income account.
