[GNC] Automating the Interest payment transactions on a Loan.

[Roger Nathanial Ashby]

Hello,

    Hopefully someone has tried to do this same thing over the years.

   1. Our company has deferred compensation liability accounts.
   2. Each month a certain amount of salary is placed in this account as a
   principal with a set interest rate with an amortization of 10 years with
   disbursement at the end of the 10 year period.
   3. To keep things simple lets say $1000 salary payment to this
   deferred compensation liability account for each month of the year, with
   10% intrest amortized yearly for ten years.
   The schedule would look like below for each month:

      start principal start balance interest end balance end principal
   1 $1,000.00 $1,000.00 $100.00 $1,100.00 $1,000.00
   2 $1,000.00 $1,100.00 $110.00 $1,210.00 $1,000.00
   3 $1,000.00 $1,210.00 $121.00 $1,331.00 $1,000.00
   4 $1,000.00 $1,331.00 $133.10 $1,464.10 $1,000.00
   5 $1,000.00 $1,464.10 $146.41 $1,610.51 $1,000.00
   6 $1,000.00 $1,610.51 $161.05 $1,771.56 $1,000.00
   7 $1,000.00 $1,771.56 $177.16 $1,948.72 $1,000.00
   8 $1,000.00 $1,948.72 $194.87 $2,143.59 $1,000.00
   9 $1,000.00 $2,143.59 $214.36 $2,357.95 $1,000.00
   10 $1,000.00 $2,357.95 $235.79 $2,593.74 $1,000.00


So, the first year each month we would record entries like this:


    Debit            Credit
Expenses:
      Deferred compensation (Y1-P)                        $1000
Liabilities
        Deferred compensation (Y1-P)
     $1000

So, the first Quarter of a year would look like this:


         January                                     February
         March


    Debit            Credit               Debit            Credit
  Debit            Credit
Expenses:
      Deferred compensation (Y1-P)                        $1000
                       $1000                                $1000
Liabilities
        Deferred compensation (Y1-P)
     $1000
         $1000


In year two, each month we'd have to enter these entries:

Expenses:
      Deferred compensation (Y2-P)                           $1000
      Deferred compensation (Y1-Y1 Interest)            $100
Liabilities
        Deferred compensation (Y2-P)
    $1000
        Deferred compensation (Y1-Y1 Interest)
 $100


In year three, each month we'd have to enter these entries:.

Expenses:
      Deferred compensation (Y3-P)                           $1000
      Deferred compensation (Y2-Y1 Interest)            $100
      Deferred compensation (Y1-Y2 Interest)            $110
Liabilities
        Deferred compensation (Y2-P)
    $1000
        Deferred compensation (Y2-Y1 Interest)
 $100
        Deferred compensation (Y1-Y2 Interest)
 $110


And so on for 10 years...

Even with the easy math above this will get tedious *very* quickly.

In our actual real world case the amount of monthly principal will
fluctuate depending on
salary changes each year, and the interest rate will change quarterly
depending on the 10 year T note.

Is there a way to automate these transactions?  I can schedule the
principal transactions because the monthly
principal contributions will be the same for given years salary, but I
don't know how to automate the interest
payment transactions since they are based on the principal and would
increase each year for each principal payment.

Thanks!

Roger Nathanial Ashby
*Principal Consultant, OpenWise *
Tel:   (301) 744-9443
Fax:  (202) 810-9128


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