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Posted by R. C. White on March 11, 2008, 4:52 pm
Please log in for more thread options Hi, RsH.
John has told you how to do it in Quicken - and I'm glad because I haven't
actually had occasion to learn how in Quicken.
The theory is pretty easy, though. You increase one asset - your [bank]
account - by the full amount of the payment received and deposited. You
record the amount of interest included in the payment received as income -
Interest Income Category. And you decrease the other asset - the mortgage
principal - by the difference.
In Accountant-speak:
Debit Bank Account $1,000
Credit Interest Income $ 200
Credit Note Receivable 800
Or, in Quicken-speak (if you don't use any Wizard):
Record it as a Split transaction in the bank account:
Deposit $1,000
Interest Income Category $ 200
Note Receivable Asset 800
In the beginning, of course, you would have made an entry to record a check
from your bank account, creating a new Asset Account called Note Receivable.
Each monthly entry for receipt of a principal payment would reduce the
balance in that Note Receivable account until, some day, the final payment
would reduce it to zero. Yes, you are transferring that amount from the
Note asset to the Bank asset.
And, just a couple of terminology nitpicks (I can't help it. I'm an
accountant, remember. Retired, but you don't turn off a 30-year mindset
that easily.): A principle is something you believe in; what you collect on
the note is principal (and interest). And you receive payments on Note
Receivable, not a mortgage receivable; the mortgage is security for payment
of the note. Yes, you hold both the note the mortgage, but the note is the
one that holds the promise to pay and bears interest. (OK. I feel better
now. <g>)
RC
--
R. C. White, CPA
San Marcos, TX
(Retired. No longer licensed to practice public accounting.)
rc@grandecom.net
Microsoft Windows MVP
(Currently running Quicken 2008 Deluxe in Vista Ultimate x64 SP1)
> I have a well diversified bunch of assets. One is a mortgage. Every
> month I get a payment which is part principle and part interest... and
> there is no easy way to enter this that I can see. Quicken does not
> seem to provide for the owner of mortgages the way it does for the
> owner of stocks, bonds or mutual funds.
>
> Any suggestions on an easy way to handle the repayment of princple and
> the recording of the interest? The mortgage is one account, and the
> payment goes into another [bank] account.
>
> There needs to be a reduction in the value of the mortgage monthly,
> but that cannot be a transfer since the money is already in the bank
> account, together with the interest when the payment is deposited each
> month.
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