church lent money

maviszook · Post by **maviszook** » Sat Jul 07, 2007 7:07 pm

Our church lent $3000 to our school (which has its own separate accounting altogether--QuickBooks) and expects the school to pay it back by the end of the year. How should I do this accounting?

My thinking is to just make journal entries about a school expense, which I would refund when the money comes back.

I don't think I need to tangle with liability accounts or Accounts Receivable. Is that right?

beas · Post by **beas** » Sun Jul 08, 2007 11:03 pm

For clarification, the school is doing all of its own bookkeeping? Correct?

If that's the case, the loan should be treated as a receivable under assets. Then when you receive payments, they should be posted to the receivable account. This way at any given time, you can look at a balance sheet to see what the balance of the loan is and your books won't show a school expense which doesn't really exist.

maviszook · Post by **maviszook** » Wed Jul 11, 2007 8:17 am

What is a receivable asset? Yes, the school does its own bookkeeping. I am not understanding. What type of account should I set up? An asset account, 3000 series number? Should I use the Accounts Receivable module?

beas · Post by **beas** » Sun Jul 15, 2007 9:19 pm

It's not necessary to use the accounts receivable module unless you want to invoice the school for their payments.

Set up an asset account. You can call it whatever you want--"School Loan" or whatever. The check that is (or was) written to the school for the loan would be credited to the bank (checking account or savings account) and debited to the asset account you set up. Then, as payments are received, they would be debited to the checking (or savings) account and credited to the asset account you set up. When the loan has been complete repaid, the asset account for the loan will be zero.

I hope this is helpful.

maviszook · Post by **maviszook** » Mon Jul 16, 2007 7:18 am

Oh, yes, that is helpful. That makes sense. Thank you.