401k loan question

Dale Alspach alspach at math.okstate.edu
Sun Mar 25 22:09:10 EDT 2007


It seems to me that when you took out the loan you had a liability
outside of the 401k for $1500 and an asset of $1500 inside the 401k.

Each time you make a payment say $30 with $8 in interest and $22 in
principal. Outside of the 401k you have a debit of $22 on the loan and
an $8 expense for interest.  Inside the 401k you have a credit of $22
against the loan and $8 in income.

Borrow 1500 and deposit into checking.

Initiation:
                 debit        credit
401k:cash                     1500     #These are both assets
401k:loan        1500

assets:checking  1500
liabilities:loan              1500

Pay $30 from paycheck

Payment:

401k:income                      8
401k:loan                       22
401k:cash          30

income:paycheck                 30
liabilities:loan   22
expense:interest    8


Dale Alspach


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