Please can someone advise me what to do with the following transactions. A payment was made from the bank for 600, the other entry for this was debit loan a/c 600, this left 600 still outstanding on the loan a/c in sage, then the bank debited 550 into our a/c, stating this was an overpayment on the loan a/c which should now show settled. This is where I think I've messed up, I debited the bank 550 to put it back in the a/c and credited the suspense a/c, now I'm really stuck because I need to clear the loan a/c as it is settled, and clear the suspense out.
Sounds like there must be another error somewhere else? Based on the info Chris, the £1,150 is the "correct" balance from the entries you've described.
Do you do a bank reconciliation of the loan a/c?
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Tony
Responses are intended as outline only. Formal advice should be sort from your Institutes Technical Department or a suitably qualified Accountant.
The loan repayment was set-up long before my time, and payments have been posted by recurring entries made directly to the ledger every month. I've debited the bank with the £550 otherwise it wouldn't have reconcilled and used the suspense a/c for the credit entry, but I can't get my head around how to clear the liability a/c and the suspense a/c. I feel really frustrated and stupid at the moment because it's probably something really simple I haven't done.
So, basically there was originally £1200 on the loan account before you made the £600 payment and there should only have been a £50 balance? (The bank returned £550 of your £600). If you do the entries that Tony suggested that will leave the £1150 on your loan account which you will need to investigate to find out where the error lies. Are the payments you make part capital and part interest? Have you accounted for the interest correctly? Think you will need to do a reconciliation as Tony suggested.
I wouldn't feel stupid bud, it's quite possibly an inherited issue.
Personally, I always set up any loan as another bank account, that way you have a natural of reconciling it with each statement. If the balance is only maintained in the nominal, then I think it's easily missed especially, as Pauline said above interest postings.
What software are you using?
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Tony
Responses are intended as outline only. Formal advice should be sort from your Institutes Technical Department or a suitably qualified Accountant.
