User Support Forum

We just purchased more land and the treasurer wants a separate Land asset account for the new purchase.
I also will have a new liability (mortgage) account.
How do I set this up so that the asset account shows the total property value and the liability account shows the amount due on the mortgage?
Then for my monthly payment to the bank do I credit the checking account and debit the liability account?
What transaction do I need to do so that the payment hits an expense account?

Thank you,
Kathy

Hello Kathy,

To add/edit the chart of accounts - Accounting>Fund Accounting>Maintain Chart of Accounts. Please know that there can be variables to consider for this type of entry/transaction - so I'd suggest discussing the specific amounts with your church accounting professional. The examples below assume that other potential expenses/gains relating to the subject transaction (i.e., surveys, appraisals, accrued interest, etc.) have been accounted for.

To enter transactions - Accounting>Fund Accounting>Enter Transactions.

To record a land asset and/or mortgage liability.
(XX = to your funds/accounts/sub-accounts)
Debit - XX-1XXX- Land Asset Account $75,
Credit -XX-3XXX- Fund Balance $75,

Debit - XX-3XXX- Fund Balance $50,
Credit -XX-2XXX- Mortgage Liability $50,

Payments on a mortgage (usually) include interest expense and a mortgage liabilty reduction (principal payment). Therefore, only a portion of each payment is recorded as an expense, the balance is "debt reduction":

($1,000 payment - $300 principal / $700 Interest)
Credit XX-1XXX- Cash Account $1,000
Debit XX-2XXX- Mortgage Liability $300
Debit XX-5XXX- Mortgage Interest Expense $700

Peace,

Eric