[GNC] Account for Seller Credit when purchasing a home

[Derek Atkins]

Hi,

On Sat, May 7, 2022 11:00 am, M wrote:
> I am still learning double-entry accounting, and I need a little help.
>
> I recently purchased a home, but the price was reduced during
> negotiation and a seller credit was applied at closing.
>
> Agreed Purchase Price: $100,000
> Seller Credit for Repairs: $5,000
> Actual Purchase Price: $95,000
>
> When I add this asset, I am stumped.  When I increase the asset by
> $100,000 and decrease other accounts for cash and loans of $95,000, that
> all makes sense.  But how do I account for the $5,000?  I see it as an
> unrealized gain... instant equity provided by the seller. But I need to
> debit an account with this amount, so it shows an unrealized gain of
> -$5,000.
>
> Should I simply just increase the asset by $95,000 and not account for
> the credit?
>
> I know I am missing the big picture.  Can anyone point me in the right
> direction?

IANAA but I would create an Equity:Seller Credit account and apply it
there.  The asset is still $100k, as that is what will be recorded, so I
wouldn't reduce it.

Hope this helps.

>
> Thanks to all,
>
> Mike

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-derek

-- 
       Derek Atkins                 617-623-3745
       derek at ihtfp.com             www.ihtfp.com
       Computer and Internet Security Consultant