Starting with GNUCASH
Mike or Penny Novack
stepbystepfarm at mtdata.com
Fri Dec 7 07:53:33 EST 2012
>
>Loans have me a little baffled. Say mortgage has payment and some goes to
>reduce principal and some goes to escrow for taxes and insurance and
>interest on loan goes to expense account. Do I use the accounts and minus
>from checking and add to escrow. then do another set of transactions minus
>from escrow and add to interest expense; credit from escrow and debit (I
>get debit and credit confused) mortgage loan... then when taxes paid credit
>from escrow and debit home insurance (expense account)? Do I ever have a
>transaction to some type of equity account?
>
>
>
You can do it in separate transactions but since your payment is
actually a single item from your bank account more normal would be to
use a SPLIT transaction (a transaction involving more than two
accounts). The escrow account is an asset belonging to you (your
property) except not under your control. Just like another bank account
(some bank account controlled by the institution processing your
mortgage). It should be in your books as an asset account. Then when you
get a statement from the institution processing your mortgage that they
have used some of these funds (to pay a tax bill, to pay an insurance
bill, whatever) you enter a transaction to reflect that.
So each mortgage payment would be:
debits:
Loan principle
Loan Interest
Escrow
credits:
Bank account (this would be entered first, then hit SPLIT, adjust
the other side amount to the first account you want to do and enter that
account, then proceed with the remaining amount till all allocated)
Michael
PS -- As always I will repeat, gnucash AUTOMATES the bookkeeping,
posting* from journal to ledger, but that doesn't substitute for
knowledge about basic bookkeeping. This automation is important/useful
since transcription errors during hand posting was one of the major
sources of errors in the old pen and ink on paper days. If the
documentation provided with gnucash isn't enough for you, get a book on
"basic accounting". We can help you with "how to do it using gnucash
way" but you may still need help with "what should I be trying to do".
--
There is no possibility of social justice on a dead planet except the equality of the grave.
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