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Level 1

How to get closing costs to be added to loan account?

Our Church received loan for 50k. During closing, closing costs were subtracted from the loan and $48,215.62 was wired to our bank. So I set up loan in the loan manager for 50k and deposited $48,215.62 from the bank account to loan account. How do I get my closing costs to be added to loan account? So I would not have discrepancies between bank statement reconciliation and loan account balance. Now the bank account reconciles good. But loan account shows less than 50k balance because I transferred only $48,215.62 from bank acct to loan acct. I cannot do general journal debiting bank account and crediting loan account because that money is not in the bank account, but it is part of the loan. How do I handle it?

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Best answer 12-10-2018

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Level 3

How to get closing costs to be added to loan account?

You need to do a journal entry that puts the closing costs in the correct accounts. You may just want to set up an expense account called Loan Closing Costs.  Then when whoever does your books at year end sees it they can ask for the information if they need it.  That way it won't get buried in another account and misclassified. Debit the expense and credit your loan payable for $1,784.38.

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Highlighted
Level 3

How to get closing costs to be added to loan account?

You need to do a journal entry that puts the closing costs in the correct accounts. You may just want to set up an expense account called Loan Closing Costs.  Then when whoever does your books at year end sees it they can ask for the information if they need it.  That way it won't get buried in another account and misclassified. Debit the expense and credit your loan payable for $1,784.38.

View solution in original post

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Level 1

How to get closing costs to be added to loan account?

Thank you, creating new closing costs expense account and debiting it worked, and now everything is in balance.
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Level 1

How to get closing costs to be added to loan account?

I thought closing costs are considered an asset account??
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Level 3

How to get closing costs to be added to loan account?

Some closing costs are an addition to the property purchased, therefore an asset.  Some closing costs are expenses like real estate taxes.  What I was having this person do was to put them in an separate account labeled "closing costs" so that they could then provide their accountant with the closing document and let he/she decide what should go where.  He/she can then give a correcting journal entry to move the various closing cost items to their proper place. 

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