overdraft

You don't.

Just replicate the transactions that take place on the bank statement. Transfer the money from the other account as a deposit plus record any fees they charge for using the overdraft protection.

Dont mean to sound dumb but....what will I set the account up as for the overdraft and transferring the funds into the bank acct will then leave that with neg. balance. In that case how do I record a transaction to replace it. This one has me totally confused.:s Sorry

... As said, just make the transactions as they occur -- the overdraft _will_ cause a negative balance (as it did in reality kicking in the overdraft protection transfer) -- so then add the deposit of the protection amount and deduct the applicable fees.

Where the money came from depends on whether you have another account w/ automatic transfer or whether it triggered a pre-approved loan transaction.

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I have one bank acct with an overdraft. thats it. So the acct it came from would be..? (new to this) if the neg acct is showing then when i make a deposit into the bank afterward it bank acct. will go up but the overdraft will still be the same. Basiclly how do i set it up and how would i do a transaction to replace to overdraft?

thanks

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If you had an overdraft, then you had an overdraft -- there is no transaction to make reality disappear.

If what you're saying is the bank simply floated you the money (used to be not so uncommon for small amounts w/ local banks; pretty unusual in today's markets) then that's all there is.

It's not fully clear what actually transpired, however, sorry...don't know of anything else to say at this point.

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Sounds like the bank gave you a loan. A loan is of course a chart of accounts item. That begin to make sense? In other words the loan account which has never before been used wasn't on your chart of accounts with a zero balance, so you need to correct that oversight and then you can record your transactions. You will also need an expense account for the interest they charge, but I assume you had that part figured out.

Gary Charpentier wrote: ...

I guess, but I surely can't tell from what's been said so far, particularly this last response... :)

I can't parse

as to what that means, precisely.

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An overdraft is not a transaction in itself, it is simply a negative balance in your bank account. It is a result of transactions (checks & deposits which you record as usual), but does not get recorded as a separate transaction.

As for what gets recorded because of an overdraft, as others have stated it depends on the type of protection you have:

Automatic transfer from another of your bank accounts = record a transfer.

Automatic deposit from the bank as a loan = record a deposit charging against the loan payable.

Bank covers the overdraft by allowing it to remain negative = no transaction as no $ changed hands. In this case you most likely would need to make a deposit (or have an outstanding deposit post) to clear up the overdraft balance.

In each of these instances there are probably fees and/or interest associated with the overdraft (negative) balance and the banks actions resulting from it. You would record these as separate transactions, allocating to bank fees & interest expense accounts.

I have clients that have Reserve Accounts that cover ODs. Money that is put into your account is simply a loan that has to be repaid with a deposit. My bank charges an OD charge of $27.00 per item paid. There is really no account involved. A checking account with a negative balance is classified as a current liability and not a negative current asset. You can have a Reserve Account that works like a credit card account and charges 18% per annum. The bank will make an ODP payment each month which is just a minimum paydown of the ODP balance due, which includes interest.