Guide: Sample for Loan chapter

[Bengt Thuree]

Hi
Here is another example for the Guide : Loan chapter.

Any comments?

/Bengt

(based upon
https://lists.gnucash.org/pipermail/gnucash-user/2005-July/014219.html)

A personal loan to a friend

This example will show how to track two personal loans
* A loan of 1,000 USD (default currency) to Peter
* A loan of 20,000 EURO (non default currency) to Mark.

We start with the first loan to Peter.

> Assets:Bank:USD (USD)
> Assets:Money owed to you:Peter (USD)
> Income:Interest Income:Peter (USD)
> Equity:Opening Balances:USD (USD)
> 

<Screen shot>

Peter's loan details:
Pinciple Amount - $1,000
Term - 1 years with 12 payments per year
Annual Percentage Rate: 5%
Monthly Payment: 85.61$

(Most spreadsheets have a built in function to calculate the payment.
In Open Office it is a Financial Function called PMT)

<screen shot of PMT>

When the loan are first made, the accounting entry will be:
				Increase	Decrease
Assets:Money owed to you:Peter    $1,000
Assets:Bank:USD                   		$1,000

<screen shot>

When the first payment is received:

Outstanding loan amount this period = $1,000
Payment per month = $85.61
Payment breakdown
  5%/12 * $1,000 = $4.17  Interest
  $85.61 - $4.17 = $81.44 Principle

				Increase	Decrease
Assets:Money owed to you:Peter    		81.44
Income:Interest Income:Peter			4.17
Assets:Bank:USD                   85.61

The balance on Peters loan is now $1,000 - $81.44 = $918.56

<screen shot>

When the second payment is received:

Outstanding loan amount this period = $918.56
Payment per month = $85.61
Payment breakdown
  5%/12 * $918.56 = $3.83 Interest
  $85.61 - $3.83 = $81.33 Principle

				Increase	Decrease
Assets:Money owed to you:Peter    		81.33
Income:Interest Income:Peter			3.83
Assets:Bank:USD                   85.16

The balance on Peters loan is now $918.56 - $81.33 = $837.23

<screen shot>

As you can see, the amount received in interest and principle changes
each month.

The Loan to Mark will be according to the same principle.
The key thing with this loan, is that it is made in a non default
currency.
But we use the same account structure as before, but ensuring that each
account's currency
is the same currency as the loan is made in (Euro) 


Assets:Bank:EURO		(EURO)
Assets:Money owed to you:Mark	(EURO)
Income:Interest Income:Mark	(EURO)
Equity:Opening Balances:EURO	(EURO)

Mark's loan details:
Pinciple Amount - 20,000
Term - 5 years with 12 payments per year
Annual Percentage Rate: 6%
Monthly Payment: 386.66$

The rest follows the previous example (loan to Peter)