[GNC] Account for Seller Credit when purchasing a home

[Robert Heller]

At Sat, 7 May 2022 11:00:05 -0400 M <M_Stagl at hotmail.com> 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?

What *I* would do is create an account to account (Seller's Credit) for the
$5,000. So you debit $95,000 for your payment (your payment account [mortage
loan?], debit $5,000 for the Seller's Credit account, and credit the asset for
$100,000. I would have this all in one multi-split transaction.

> 
> Thanks to all,
> 
> Mike
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