Line of credit

[Alan Schold]

Thanks again for the great advice. Double entry accounting is just not 
my strong suit. So if I want to track payments from that basket 
separately, I guess I ought to create an artificial second checking 
account. I assume the debit (LoC) and credit (new checking) accounts are 
to be connected, or will I need to enter the amounts manually.


On 9/15/2016 7:29 AM, David Carlson wrote:
> Alan,
>
> When the bank transfers money to you that consists of an increase in 
> one of your asset accounts (probably a checking account) as well as an 
> increase in that liability account. That means that you just spend the 
> money from there.
>
> Conversely, when you pay the LOC off, you take money out of your 
> checking account to do that.
>
> David C
>
> On Thu, Sep 15, 2016 at 8:18 AM, Alan Schold <aschold at q.com 
> <mailto:aschold at q.com>> wrote:
>
>     Thanks, David, I've set up a line of credit sub-account under the
>     Credit Card account with nothing in it. When the bank transfers $$
>     to me I'll put it there. However, When I pay a bill with that $$ I
>     do not want to decrease the amount I owe, so I can't use that
>     account for the disbursement. Obviously, when I pay the bank
>     principal (but not interest) the L0C account would be debited. How
>     would I account for that?
>
>     On 9/13/2016 9:57 AM, David T. wrote:
>
>         Alan,
>
>         Both types of account are liabilities.
>
>         When you use a credit card, you borrow money, which you would
>         track with a transaction in that amount. Same with the line of
>         credit. (e.g., $100 from CC/LOC into Checking)
>
>         The financial institution in both cases will charge you
>         interest on the balance, which will be a transaction. (e.g.,
>         $5 from Interest to CC/LOC)
>             (Note that the interest rate is immaterial to the
>         accounting. You only need to know the amount of interest being
>         charged.)
>
>         Finally, you must pay back the balance for both accounts with
>         a transaction from your assets. (e.g. $105 from Checking to
>         CC/LOC)
>
>         Does that clear things up?
>
>         David
>
>             On Sep 13, 2016, at 9:06 PM, Alan Schold <aschold at q.com
>             <mailto:aschold at q.com>> wrote:
>
>             The GnuCash Wiki suggests that I should use a credit card
>             account to track a line-of-credit loan. With all the
>             elements (outstanding balance, payment and interest rate)
>             potentially changing could someone give me a few details
>             on how to set up and use such an account? Thanks
>
>             _______________________________________________
>             gnucash-user mailing list
>             gnucash-user at gnucash.org <mailto:gnucash-user at gnucash.org>
>             https://lists.gnucash.org/mailman/listinfo/gnucash-user
>             <https://lists.gnucash.org/mailman/listinfo/gnucash-user>
>             -----
>             Please remember to CC this list on all your replies.
>             You can do this by using Reply-To-List or Reply-All.
>
>
>
>     _______________________________________________
>     gnucash-user mailing list
>     gnucash-user at gnucash.org <mailto:gnucash-user at gnucash.org>
>     https://lists.gnucash.org/mailman/listinfo/gnucash-user
>     <https://lists.gnucash.org/mailman/listinfo/gnucash-user>
>     -----
>     Please remember to CC this list on all your replies.
>     You can do this by using Reply-To-List or Reply-All.
>
>