Construction

[Bpipes]

We are adding on to our building. The amount of the construction is $1,900,000. We have a approved loan for $1,000,000 and $900,000 will come from contributions. As we receive the contributions, we will send the funds to the loan company. They will pay the construction company but will use our $900,000 first then will proceed with the loan funds. How will I record these entries?

[Jeff]

I am assuming you are going to capitalize the addition to your building. The accounting class answer would be to create a building under construction in your assets. When you use the contributions, you would credit the bank account where the money is coming from and debit the under construction account.

When you start using loan proceeds, you would credit the loan liability account and credit the under construction asset account.