Hi, where should I enter for interest? Ermmm… I mean I do have customers pawn in their stuffs, and we charging them interest weekly depend on the pawn value, if customer don’t come to redeem their stuffs or paying interest when due date then we will burn their stuffs. (mean we can sell off their stuffs). Can this be done automatically?
I don’t know common accounting practices for the pawn industry. But you have made your customer a loan, secured by the item(s) they pawned. You don’t really own the pawned items, so they are not inventory. But you should create an asset account for the outstanding loans.
Interest income should go into an income account.
If a customer defaults on the loan, the security item becomes your inventory at the remaining balance of the loan. That is, you convert the asset of the loan (which was intended to produce interest income) to the asset of inventory (which you hope to sell for a profit).
Manager will not do this automatically, because it has no way of knowing the loan will not be repaid.
You might be able to use the recurring sales invoice feature to set up billing for the loan.