Hi @BTOWNMN. Thanks for joining the thread and sharing the details about how you record the loan.

You're doing the right thing when entering your journal entry (JE) to show the credit from the city and a debit to the account directly. This transaction will negate the long-term liability when you paid it in full when it has a balance.

However, if the long-term liability has no balance, you won't have to enter a negative amount. Then make sure to create the JE to credit Liability then debit the Bank account. This will increase the balance of the liability when receiving the loan. Feel free to check the screenshots below:

This will create an amount in the loan account, so when it's time to repay it, you can then add a check to negate or 0 out the amount.

This will be what it looks like in the loan account register:

I've also attached a helpful article that can guide you in managing your loans in QuickBooks Online: Loan in QuickBooks Online.

If you're doubtful about the proper account to use, I'd suggest consulting an accountant for professional advice to keep your books are accurate.

Let me know if you have additional questions or concerns about creating a loan. I'll keep my notifications open to help you. Take care and have a great weekend!