How do I reclass a deposit from Equity to Loan Payable? The journal entry should be Debit Equity and Credit Loan Payable but it looks like the balance in Equity is debit

I initially recorded the deposit to Equity but later found out that it should have been recorded to a loan payable account.  I want to reclass the deposit but it looks like the balance in the Equity account is a debit rather than a credit.

Answer

The original deposit Debits bank and Credits Equity. If it was a Payable Liability, then it should have Credited Liab. So, the reversal of the Equity is the Debit and the Liab still is a Credit = Payable to another. If it is loaned to this entity, that makes it a Liability to be repaid = Credit Liab.

As far as the Balance in the Equity account = it was what it is, unless something else is wrong.

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