Setting up an establised Loan , Past property purchase

Trying to setup accounts from this financial year.
Searched the forum and still struggling to set this up.

It is a Business Bank Bill loan.

In Manager.io I deposit funds into the loan account(liability) from a transaction account and it shows up in the Debit column.
There is also monthly interest charge to the loan account.

Say the loan amount is currently 100k, and the monthly deposit from the cash account is $1000 and the monthly interest charge is $500.

How exactly should this be set up?

If I set up a liability account and use a negative eg -$100,000 the funds appear in the debit column. The deposit from my cash account shows up in the debit column as well so it adds to- 100000+ -1000 adding to -10100 which doesn’t reconcile with my loan statement.

What am I doing wrong?

On the loan statement from the bank The balance is minus. The monthly deposit is shown positive in the credit column and the interest charge is shown as a negative number in the debit column.

How do I get all this to match up?

Cheers for any help.

This statement doesn’t make sense as you don’t deposit funds into a loan account to set it up. Have you set this loan account up as a Cash account, then it shouldn’t be - Just open a regular BS Liability - Loan account via Settings - Chart of Accounts.

If the bank has paid you the funds then Receive Money into transaction/current account and the line item Account = Loan Account, now the balance will be a credit - matching the bank statement.

If the funds were paid to third party (property purchase) then do a Journal - debit (Fixed Asset) and credit Loan Account

For the monthly payment Spend Money = 1000 and the first line item Account = (P&L) Interest Paid 500 and second line item Account = Loan Account 500

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Sorry, I didn’t express that well at all.

  1. I created a liability account with the loan amount of -100,000 as it currently stands. the -100,000 was put in as a credit in the initial settings.

  2. When I imported my cash account statement one of the transactions was a payment to the loan of 1000, This I settled in Manager.io to the Liability account - it appears in the Debit section of the Liability account and instead of making the balance higher, it makes it lower (More negative - this is not how my bank statement looks!) In my Bank statement - The deposit from my cash account appears as a positive number in the credit column and makes the balance less negative. The interest charge appears as in the Debit column and makes the balance more negative.
    Need work out exactly where this is supposed to go please!

  3. On my bank Loan statement there is an Interest charge that appears as a number in the Debit column.

How do I put this into the liability account in Manager io? If I set up a journal could you please explain exactly how, eg a positive number or negative number, in the Debit section or credit section?

It shows out of balance when I do a journal, So I assume I need to also create a Fixed asset account? How should it appear in the journal?

  1. The money was paid th a third party form the loan 2 yrs ago.

"For the monthly payment Spend Money = 1000 and the first line item
Account = (P&L) Interest Paid 500 and second line item Account =
Loan Account 500"What is the account=(P&L)

Can you please explain what this means?

Many thanks for the support please forgive the ignorance.
Once I get this setup, its all good to go for me.

The convention in accounting is to enter liabilities as positive numbers. In fact, virtually everything you enter in Manager should be as positive number. Manager knows what to do with it based on what account it is allocated to and what function is generating the transaction.

Don’t worry about that. The bank is on the opposite side of every equation from you. A credit for them is a debit for you and vice versa.

Absolutely not. Fixed assets are physical things you own that are subject to depreciation over time.

If you are new to double-entry accounting, I recommend spending some time at http://www.accountingcoach.com to learn the basics. Manager is only a tool. Until you understand what the tool is supposed to do, little will make sense. Manager doesn’t do your accounting for you, it helps you do your own.

Sorry, but your mixed usage of debit, credit, positive, negative terminology is very confusing. Please use figures as your illustration points. Firstly, the bank statement’s Debit & Credits are the opposite to your books Debits & Credits. When the bank gives you a loan it appears in their books as a debit because its owed to them (accounts receivable if you like) and in your books it is a credit because you owe it to them (accounts payable if you like)

If I understand you correctly, you created a liability account and this has a balance owing of 100,000 so this should be in the credit column. Then you make a payment of 1000 and it appears as a debit so the balance should now be 99,000 - this would be the correct result. However, if your balance is 101,000 then your initial settings is wrong.

By initial settings - do you mean opening balances, if yes. then if you selected “credit” for the opening balance then the figure should be entered as 100,000 NOT -100,000 - because the Credit + Minus sign = Debit (two negatives make a positive)

Once this part is fixed, we will then look at your other questions

Hi Thanks Again.
That makes a lot more sense. I was trying to get the bank statement to match my accounts.
Will read the link you gave and am meeting the bookkeeper in a couple of weeks, was trying to get thins cleared up prior.

I have set it up as you suggested - Liability account opened with starting balance in the credit section.
The payment from my cash account goes in correctly.
Now I just need to setup the interest charge. This appears in my bank statement in the debit section.
I am guessing -
Create a Journal and create a credit to the loan liability account.
How do I then get it to balance.
Do I create a Fixed asset and do a second line on the same journal for the same amount as a debit to the fixed asset?
How do I set up the asset (property being rented) purchased 1.5 yrs ago?

Cheers

Currently in Manager the Liability loan account it looks like this after I reconfigured it.

29.7.16 - Journal entry credit 500 Balance 99,500
14.7.16 Loan Payment Debit 1,000 Balance 99,000
1.7.16 Starting Balance Credit 100,000 Balance 100,000

The bank statement is in reverse,
ie -$100,000 starting balance
Loan payment in credit section and Interest in the Debit section.

Just need to fix the Journal to get it balanced.

Your loan account statement or your transaction/current account statement.
Knowing which one will determine which correct process to use.
If your loan account statement, do you get that monthly ?

Loan account. Monthly.

Therefore to take up the interest charge you would use a Journal.
Debit - P&L Expense - Interest Paid
Credit - BS Liability - Loan Account
Then each month you could use the clone feature available under the View button of the previous months Journal

Great Thanks,
All fixed up.
Rather than starting a new thread - Next question.

When doing the BAS work sheet, Interest earnings is supposed to go into G4 as it is GST free income.

eg http://www.flyingsolo.com.au/forums/index.php?threads/recording-interest-income-or-bank-fees.31969/
and
http://www.icb.org.au/out/4092/GST

Mine isn’t going in there.
How does Manager io sort out interest income? Am I not allocating interest income correctly for it not to show up on my BAS worksheet?

Cheers,

What tax code have you associated with the interest earnings - should be GST Free

Yep it is marked GST free and not including it in the BAS will of course make no difference to the final calculation but it is supposed to be in the BAS I thought.

Is the date of the interest received transaction within the period of the BAS ?

Ok yes, it is there but it is listed under GST free income (G3), Not in G4.
It should be fine though not exactly accurate as per my understanding of what goes into G3.

There is in-built tax code called Australia - Input Taxed. You can use this tax code for items you want to show under G4.

Interest Received is more likely to be GST Free then GST Input Taxed

https://www.dlsweb.rmit.edu.au/toolbox/balanceact/toolbox11_06/resources/html/ffact_gstcodesterm.htm

Not quite, @Brucanna. Everything else you say is correct, but let’s be careful with the accounting nomenclature here. Under double accounting, every debit has a corresponding credit within the same set of books (or, in Manager terminology, within the same Business). When the bank gives a loan, the bank’s books show a debit to the borrower’s account (or, if you like, a debit to the Loans Receivable sub-account assigned to the borrower), but there is also a credit in the same amount to the Cash account on the bank’s books to reflect a decrease in the bank’s cash holdings. Correspondingly, on the borrower’s books, there is a debit to the Cash account (receive cash) as well the credit to the Loans Payable account to reflect the new liability.

Lets not get down to being pedantic about symmetry. The concept of the relationship between the parties with regards to the loan was only being illustrated and this was clearly grasped and understood by the topic originator, via their comment “That makes a lot more sense”. There was absolutely no need to clutter the response with unnecessary drilled down details relating to the actual construction of the transactions.

[quote=“Jon, post:19, topic:6594”]
When the bank gives a loan, the bank’s books show a debit to the borrower’s account,. . . but there is also a credit . . . to the Cash account on the bank’s books . . . . . Correspondingly, on the borrower’s books, there is a debit to the Cash account . . . as well the credit to the Loans Payable account [/quote]

To extend the logic of this point implies that whenever a topic is raised with regards to a particular concept’s due process then any contributors response needs to be expanded so that there is inclusion and analysis of any supporting transactions as per the quotation.

The vast majority of Manager’s users have demonstrated that they have sufficient understanding of the double entry principles that they don’t require a constant and repetitive explanation in responses on how to dot every I and cross every t.

Lets focus on the main issues and detail the nitty gritty stuff when circumstances dictate.

Perfect I will Set up Interest income as Input taxed income rather than GST free income.
Many thanks.