First you want to pay close attention to the real entries as they happen before you set up your procedures.  I've seen different banks handle things differently.  Your's appears to be fully automated but...

MarcDu said:

- A LOC of $XX,XXX.00 where money is automatically taken from it when there's insufficient funds in my bank account.

This line may make some people think that the money is taken from your credit line and sent to the vendor.  When in reality, it is probably taken from the credit line (increasing the balance owing on the credit line) and deposited to the bank account in response to a vendor payment that takes your bank balance below zero.

MarcDu said:

- A monthly fee of $XX.00 for the LOC

I would set this up as a recurring general journal entry once you see how it is handled on the statements.  At some point it will be paid by money in your bank account, we just don't know the timing of the charge vs. the payment and whether it really hits your LOC statement, based on the information you have given.

MarcDu said:

- A monthly interest rate of 7.5% on the amount of money taken from the LOC

Same as above for the monthly fee.  If it hits your statement and then paid later, mimic that in your books.  First Debit the expense and credit the LOC.  Then when the payment is made, debit the LOC and credit the bank (if that is where the payment is taken from).

MarcDu said:

- When doing a deposit, money is automatically asigned to the LOC to pay back money taken from it

Again, check the details of the entry when it happens, but again it sounds like a completely separate entry that you will then set up as a recurring general journal entry that debits the LOC (decreasing what is owing) and credits the bank (decreasing the bank balance) whenever it happens.

MarcDu said:

So far, what I was considering is setting it up like a credit card (i.e.: 2100 account) and recording both interest and payments to it that way. Not sure if this is the right way though as some payables will be split between my regular bank account and the LOC.

I've seen some people use the LOC as a credit card type account where they make payments directly from the LOC to a vendor.  To me that makes life more difficult, especially when you already are paying for the automatic covering of your bank account balance.  Why juggle different payment methods?  It's up to you.  If you want to set it up as a credit card or bank account, instead of a liability account, you can and then you can set up a credit card that uses it (or Paid by Cheque that uses it as a bank account) so you can record LOC cheque numbers.  However, again, get into the details of how it works before you make a decision.

Thanks for the reply Richard. Something definitely worth thinking about.

As Richard has indicated there are different ways of handling the LOC depending on the bank. I have a client with a RBC LOC. When the RBC chequing account is over-drawn by any amount at the end of the day the bank transfers funds from the LOC to the chequing account in even $1,000 lots. The same goes the other way when the chequing account has a balance at the end of the day, if there is at least $1,000 then it is transferred to the LOC account. as this is done automatically by the bank we have no way of knowing the transaction has taken place without doing a daily reconciliation. Our decision was to do a monthly reconciliation when the LOC statement is received. The transactions are entered from the LOC statement first. The interest and insurance costs are on the LOC statement but for information purposes only as they also show on the Chequing account statement. Once the LOC Statement is complete, the Chequing account statement has all the relate entries ready to be reconciled.
In our case the LOC account is set up as a Bank Loan in the Liabilities as it is a fluctuating bank loan.

Thank-you Alwyn. In regards to my case re: LOC, this definitely helps.

Since I have yet to use the LOC, I'll have to look at my statements at the end of the month. If it's pretty much the same as what you just described, Your way of recording the entries will work well for me.

Cheers,

Marc