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Financing insurance
Hi We financed our PI insurance last year. I have a question re the unexpired interest account please. Premium paid was $25,650 + gst (plus prof fees ad stamp duty), totalling $30,010 incl GST I set up the assets and liab accounts, entered the purchase applying GST where relevant and paid for the purchase with the newly created Finance/loan account (set up as a credit card/bank) Unexpired interest was $2,217.91 so total funded amount was $32,228.68, I created this account and transferred the amount of $2,217.91 from the Loan account to the unexpired interest account. Repayment were made monthly for 11 months at $2,929.88 per month and set up to reduce the funding liability account. Monthly journals were created to take up the insurance expense and reduce the Prepaid insurance asset account. From reading various MYOB posts it seems that after the 11th repayment any amount on the loan accountshoucd equal the balance of the unexpired interest account but in the opposite direction, and payment from the loan account to the unexpired interest account should zero both. This is not the case, my loan account has been cleared by the repayments but the the unexpired interest account is showing a negative balance of $2,217.91. Have I treated the unexpired interest incorrectly in the setup? Should this amount have been included in the original purchase? I'd be very grateful for any advice Thanks S
Welcome to the MYOB Community Forum, I hope you find plenty of useful information.
Have a read of the attached Bank Loan and Chattel Mortgage document.
It talks about how to set up a Bank Loan for a motor vehicle and record the Interest and the payments.
Yes it is for a motor vehicle, but the principle is the same for all loans and a loan for funding insurance is treated the same way.
Do a Journal for the original purchase and include everthing in this journal.
Then do Spend Money for the payment recording the Interest as a positive and a negative - this effectively moves the interest from the Liability to the Other Expense account.
Hope this helps.
