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Loan Setup
Posted: Tue Jan 05, 2021 1:50 am
by Lolbkpr
Hi,
We have had a loan for some time that we have not set up as a loan in PowerChurch. Currently we have it as an Expense line item and we put the payment in the budget as a line item, the monthly payment x 12 is the annual budget. I'd like to fix it for 2021 to show the loan balance on the Balance Sheet. I wanted to get an example of how to set up the loan, and how to post each month's payment as far as which accounts to debit/credit and where to record interest and principal. Thank you!
Re: Loan Setup
Posted: Tue Jan 05, 2021 5:47 am
by NeilZ
Lolbkpr wrote: ↑Tue Jan 05, 2021 1:50 am
Hi,
We have had a loan for some time that we have not set up as a loan in PowerChurch. Currently we have it as an Expense line item and we put the payment in the budget as a line item, the monthly payment x 12 is the annual budget. I'd like to fix it for 2021 to show the loan balance on the Balance Sheet. I wanted to get an example of how to set up the loan, and how to post each month's payment as far as which accounts to debit/credit and where to record interest and principal. Thank you!
A few questions, I take it that you've already accounted for any funds that you received from the loan, right? If so, that makes setting up the liability a bit harder. What was the loan for? If it were land, you can then create a land asset that would balance the transaction for the liability.
As you can see, additional information is needed.
Re: Loan Setup
Posted: Tue Jan 05, 2021 11:28 pm
by Lolbkpr
The loan was taken out to pay off our mortgage, so a portion of it paid off our mortgage and the remainder is sitting in a restricted savings line item and we are saving it for building improvement projects or for other facility emergencies. It is not secured like a mortgage, though.
Re: Loan Setup
Posted: Tue Jan 05, 2021 11:47 pm
by NeilZ
Lolbkpr wrote: ↑Tue Jan 05, 2021 11:28 pm
The loan was taken out to pay off our mortgage, so a portion of it paid off our mortgage and the remainder is sitting in a restricted savings line item and we are saving it for building improvement projects or for other facility emergencies. It is not secured like a mortgage, though.
Unfortunately, when you put the received cash into your checking account, and created the savings account, you should have created the mortgage liability. Now since you have obviously debited those two asset accounts, what account did you CREDIT to balance the transaction. I'm hoping you didn't credit any income accounts.