I'm struggling with how to account for a loan repayment. My client is a charity who made a 10 year loan of 25000 and repay 1250 (plus interest) every 6 months. They set up a fund for these repayments so when they pay an installment I have to account for the both the loan a/c and the fund a/c, but can only offset one of them from the cash a/c. Let's forget the interest for simplicity. I have
Cr 1250.00 (bank a/c)
Dr 1250.00 (loan a/c)
Dr 1250.00 (fund a/c)
Cr 1250.00 (??? a/c)
I've obviously got my wires crossed somewhere. Any clues?
Sorry to know, you are facing bit trouble.
Well, a bit similar scanario I faced too. But what actually we used to do is:
Suppose, we are making payment of loan on every 1st and we have dedicated fund account for the repayment of loan.
First we will, on the same day do a bank transfer to Fund account.
Dr : Fund A/C (Increasing the fund account, write in description - money transfereing to fund account for the repayment of loan etc)
Cr : Bank A/C (Decreasing the bank)
Then after doing the above transaction
Dr : Loan A/C (Loan repayment)
Cr : Fund A/C (Shows that loan is paid from fund account)
Hope this will help.
Edited at 16 Jun 2017 07:34 AM GMT”