personal loan to friend, unpaid accumulating interest account

[Donald Coleman]

When one has made a loan, what account should source the unpaid interest?
As long as payments are regularly made, which include the monthly 
interest, there is no need for this.

But in this situation, payments are being skipped, so the loan balance 
is increasing, as the unpaid interest is accumulating.   So from where 
should I transfer "owed interest" into the loan balance?

So I have four accounts currently involved in this loan.

Assets:Current Assets: Bank
Assets:Investments:Loan to Friend
Income:Interest Income:Investments
Unspecified

I would like gnucash to track accumulated unpaid interest.
Currently I'm using the "Unspecified" account to be the source account 
for this, but I think there should be a better account.

I shouldn't use an income account, because it's not income until the 
loan is actually paid... I guess it's an asset... but then I have a 
negative balance in an asset account, which as long as the interest 
isn't paid, is balanced by the accumulated unpaid interest reflected in 
the loan account -- but once the payments are caught up and owed 
interest paid, the interest paid will be an income, and not able to 
balance the negative asset balance in the account tracking the unpaid 
interest...

So I'm a bit confused as to the correct solution here, with regards to 
the account type and hierarchy...

Thanks for any help,
Don



-------------- next part --------------
A non-text attachment was scrubbed...
Name: smime.p7s
Type: application/pkcs7-signature
Size: 3242 bytes
Desc: S/MIME Cryptographic Signature
URL: <http://lists.gnucash.org/pipermail/gnucash-user/attachments/20090512/0a094fd4/attachment.bin>