New Finance loan on Commercial equipment and setting up in myob essentials.

[Castaway]

Hey Guys, So we just got finance for a new crane. Payment has gone straight to where we purchase from, so has not hit any of our bank accounts. I have gone through the steps of Set up a hire purchase arrangement

The repayments are coming out of our bank which is set up in our bank feeds. Im a little or alot lost when allocating and where to go from here. Step 5 has got me confused. 

[LRBooks61 · Accepted solution]

Hi

So you have set up the crane as an asset in the chart of account

You have set up the Loan and the unexpended interest  accounts as Liabilities in the chart of accounts

So when you repay the loan the spend mony transaction

is asa per the example shown in step 5

DR 2-XXXXLoan the whole amount of the repayment  (this reduces the loan amount by the repayment) (405.65 N-T)

DR 6-XXXX Interest on loan ( this reports the interest paid on the loan)  (100.00 FRE)

CR 2-XXXX unexpended interest on loan (this reduces the unexpended interest on the loan) (-100 N-T)

Hope that explains it

Lisa

[Castaway]

Hi Lisa,

I think it might. So I dont put the spend money in i just allocate my bank feed for the repayment like this. So I have a Amortisation Schedule here. Then first Payment has not interest due on it, the second payment has

Payment Amount $          Principal Due $      Interest Due $

4,965.95                            2,483.49                    2,482.46

So I would put 

4965.95 as   DR 2-XXXXLoan  the whole amount of the repayment

2,482.46 as  DR 6-XXXX Interest on loan ( this reports the interest paid on the loan) 

2,482.46 as   CR 2-XXXX unexpended interest on loan (this reduces the unexpended interest on the loan) 

Is this correct or am I way off. 

[LRBooks61]

That is perfect!,

just remember that the interest in the 2-XXXX liability account when used in spend money is a negative 

cheers

Lisa

[Castaway]

OMG Thank you.