Loan Question

[Jochen De Smet]

I'm having more or less the same problem. The difference is
that i booked the liability in two steps. I entered a transfer
from the liability account to my bank account for the principal
and a transfer from the liability account to an expense account
for the interest.

So when i make a payment i make a transfer from my bank account
into my liability account.

The result of this zeroes out nicely when the whole loan will be
paid: the liability will be zero and the expense account will
correctly show the amount of interest paid.

The problem i'm having is that this puts the complete interest
amount as expense right from the start. This seriously skews
all reports wrt expenses. I haven't found a way yet to both have
the liability show the correct amount up till now for the
"interest paid" expense.

J.

On Wed, 2002-12-04 at 22:39, Charles M. Gajan wrote:
> I was looking back in the archives to investigate a problem I am having
> with a loan.  I found the messages reflected my understanding of the
> procedure for booking the loan and depreciation.  However, I am a
> confused.  When booking the liability I entered the entire amount.  Loan
> = principle + interest (this is where my confusion starts).  When making
> my monthly payment I credit checking, debit liability for the principle,
> and debit interest expense for the interest.  Should I have only the
> principle reflected in the liability account?  If not, how will it ever
> reduce to zero.  Any help in clarifying will be appreciated.
> 
> Chas. 
> 
> 
> 
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