Mortgage Payoff

[KSalem]

Regarding posting mortgage principal payments. Previous users posted principal payments as a db to the mortgage liability account and a CR to unrestricted assets 3110. Over the years other "adjustments" have been made with postings directly to 3110. It currently is labeled operating fund gain(loss) and has a negative balance. We have now paid off the mortgage and need to zero out the balance it carries under long term liabilities. Do I just continue with the previous process of DB mortgage liability account and CR 3110? Don't believe this is the correct method but we are far down this path already.

[NeilZ]

Regarding posting mortgage principal payments. Previous users posted principal payments as a db to the mortgage liability account and a CR to unrestricted assets 3110. Over the years other "adjustments" have been made with postings directly to 3110. It currently is labeled operating fund gain(loss) and has a negative balance. We have now paid off the mortgage and need to zero out the balance it carries under long term liabilities. Do I just continue with the previous process of DB mortgage liability account and CR 3110? Don't believe this is the correct method but we are far down this path already.

FWIW ... what's the old saying, "don't change horses midstream" ?? I'd just clean up whats left, and if another mortgage is created in future, just do the proper setup.

[Jeff]

the previous process of DB mortgage liability account and CR 3110?

Most people do this because they want to show the whole mortgage payment as an expense on the income and expense statement. The problem then becomes how to reduce the mortgage liability account, that is why you are doing a transaction to the unrestricted equity account.

In accounting the reduction of a liability is not an expense, but that is hard to explain to people and boards want to see the whole "expense" of the mortgage payment each month on the income and expense statement. It also makes budgeting easier too.

There should have been a part of your previous process of crediting the bank and debiting an expense account.