I have a loan that has the "Borrowing Cost" added into the loan upfront. I do not know what portion of the payment goes to the principal. What is the best way to book this loan?

Heather_PSI · ‎April 02, 2020

I have a loan that has the "Borrowing Cost" added into the loan upfront. When payments post, I do not know what portion of the payment goes to the principal. What is the best way to book this loan?

In my liability account I have the principal balance offset to my bank deposit. My full payment posts to the liability account. Technically the "excess" remaining in the liability account would be the "borrowing cost" HOWEVER, if the loan overlaps year-end, I do not know how much "borrowing cost" was paid in the previous year.

KathyS296 · ‎April 18, 2020

In this situation I usually use an excel spreadsheet to create an amortization schedule to use AFTER checking the loan papers. Total loan less amount financed equals interest expense.

Please mark this as solved when you have an acceptable solution so it will be moved from the unanswered questions list.

Kathy

Topics

Training

Community

Resources

I have a loan that has the "Borrowing Cost" added into the loan upfront. I do not know what portion of the payment goes to the principal. What is the best way to book this loan?

I have a loan that has the "Borrowing Cost" added into the loan upfront. I do not know what portion of the payment goes to the principal. What is the best way to book this loan?

Need to get in touch?