We have recently received a loan and I have chosen to set this up as a bank account (1252) after reading other posts and I will find this easier to reconcile.
I have the following questions;
I want to put on a bank receipt into the account to show that we have received the loan and then transfer the amount received to our current account (1200). Do I put the amount that we actually received or the amount that will be paid in full including interest. I am thinking that I will leave the interest off as this will be dealt with seperately?
I have set up a nominal code 2301 for the loan to keep it separate and I am assuming that I will use this code when entering the bank receipt?
I then want to show the amount that we pay off the loan each month. I am assuming that the best way to do this would be a journal and I want to be sure that I am doing this correctly as I am still getting to grips with journals. I want to show the amount paid to the loan account (1252) the amount paid in interest will vary each month depending on how much we pay back, so I will need to show this, which nominal code do I use? And will the journal reduce the liability under the loan nominal code (2301)
I hope I have explained this clearly and would be very grateful for any response and a guide to the monthly journal I should do?
Not following why you have set up account 1252 as dont think is necessary as the loan is deposited in the current account.
To put some figures to things say you receive a loan of £20k which you are paying back over 20 months ie £1k capital per month plus variable interest then this is how you would record.
To record the intial loan receipt
Dr 1200 Bank £20k
Cr 2301 Loan £20k
Each month you will be paying back £1k plus whatever interest.
Say the first payment is for £1050 ie £1k loan and £50 interest. Then the journal to record is
Dr 2301 Loan £1k
Dr 7903 Loan Int £50
Cr 1200 Bank £1050
Each month the loan would be reduced by £1k and any extra paid would be debited to the loan interest account
