[GNC] Record Loan Interest

[Aaron Laws]

On Mon, May 4, 2020 at 2:26 AM flywire <flywire0 at gmail.com> wrote:

> Sorry, another loan query. Going in circles and thoroughly confused by
> https://www.gnucash.org/docs/v3/C/gnucash-guide/loans_mortgage1.html
> which seems
> to cut out before the interest is paid and flip to making a loan.
>
> I have a loan account (say $1000 Liabilities:Loan) and the interest is
> calculated and added to the loan annually (say 30 June 19 $10 interest is
> added to Liabilities:Loan). On 29 June I pay $9 from Assets:Saving and let
> the rest increase the loan. Using cash accounting I need to track the $9
> Expenses:Interest-paid, and the current loan balance which is a combination
> of principle and interest.
>
> Direction to the best place in the guide would be useful.
>

Most loans (certainly mortgages) aren't allowed to grow like this, so the
manual doesn't cover it. When your interest accrues, it will look like this:

Expenses:Interest          $10
        Liability:Interest                   $10

and since you don't pay off all the interest every month, your payment
looks like this:

Liability:interest          $10     (this reduces the account to $0
interest)
        Assets:Checking          $9
        Liability:Note                 $1

Does that sound right?