I am having some real problems with line of credit entries and I hope that someone can help me.
I have a line of credit that we take draws on to pay for a major stonework project that is going on. The money is directly put into our regular general fund checking account.
I have made my entries to show the liability increasing and the addition put to the checking. Everything looks great in the checkbook.
When I print my income/expense balance sheet we are alway WAY off because nothing to showing in the income side to offset the stonework check that I am writing to pay the contractors.
Has anyone had the issue before, and how can I properly make the "right" entries for everything to be right.
If I understand your question properly, I would assume that your Liability account is off by the same as the expense account that you are paying the contractors with. You need to transfer the money that you are off from the Liability account to the expense account then in the future cut the check to the contractor directly against the Liability account.
Unfortunately, I can not put the expense account against the liability directly. Both the finance committee as well as the Trustees want to see both the entries with the money going into the general fund (because the bank will show it as a deposit) with the liability increased and the income coming into the stonework account and going right back out as an expense.
I know that there is probably a real easy solution to this, but I have tried everything that I could think of.
Thank you!
Also...the liabilty account is right, no difference. It is the income that is off, because it looks as though checks were written off of money that is not there.
When I print my income/expense balance sheet we are alway WAY off because nothing to showing in the income side to offset the stonework check that I am writing to pay the contractors.
It sounds like you have done the accounting transactions correctly. You wouldn't have income to offset the expense so it is going to show a negative excess income/expense at the bottom of the income statement.
Do you want to capitalize this project? In that case you would not expense the payments to contractors instead you put them towards an asset account.
Another option to consider is to use another fund to keep track of this project. You are going to have the same problem when you run a consolidated report because the loan will not be shown as income.
You might want to consider using a sub-account rather than a liability account to do this. You can then create an income account and an expense account with the same sub-account number which will then report out showing the income and expense separately when you do a sub-account report. And since the two accounts are only linked by the sib-account number you can do detailed reports on each account showing deposits in the income account and payments to the contractor in the expense account completely separate from each other.
The current problem you have is that by definition a liability account is something you owe. Once you have paid the liability you no longer owe it and the liability is zero meaning the account should be zero.
