setting up a loan

[PattiD]

I do books for 2 related parachurch organizations - same organization, different provinces in Canada. 1 province is lending money to the other province for just a matter a few weeks. How should I set this up in each set of books? The organization on the receiving end uses 11.1. The organization on the lending end uses 11.5. Although I am the one to do their books, I don't have much experience (or knowledge) outside of regular day to day things (ie - need simple explanation ) Does the organization on the receiving end need to enter this as a "contribution"? What would such a fund close to? And, from there where? ....

Thank you for any help!
Patti

[Matt]

On the books for the province that is lending the money you will want to set up an Accounts Receivable account in the chart of accounts. Once that is done, post the following entry:

Debit Accounts Receivable
Credit Checking Account/Account money was paid from

Then, on the books for the province that is receiving the money you will want to set up an Accounts Payable account in the chart of accounts. Once that is done, post the following entry:

Debit Checking Account/Account money was deposited to
Credit Accounts Payable