Line of credit

[David T.]

You don't need a separate checking account; the payments from checking to the LOC will show in the LOC account. Presumably they will be described as "LOC Institution” as well (which will be searchable in checking).

It is true that you need to enter transaction amounts manually, but then, that’s generally true for any transaction. Entering a payment is pretty straightforward: in Basic View mode, enter the date, the description, select the destination account (your LOC), and the amount. Press Enter. Done. The transaction itself serves as a link between the two accounts.

I suggest that you try it out a little and see how it looks. It’s more complicated to describe than try out. Also, the early chapters in the Tutorial and Concept Guide provide some helpful background.

David T.

> On Sep 15, 2016, at 9:05 PM, Alan Schold <aschold at q.com> wrote:
> 
> 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
>> 
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