Sorry, another question - this one regarding loans
Emma1708
Registered Posts: 217 Dedicated contributor 🦉
Do the loan and credit card repayments need to be shown as an expense or is it just the interest on them that is shown?
Thank you
Thank you
0
Comments
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It is the interest only that is shown in the P&L. The capital element of the loan will sit as a liability on the balance sheet. The credit card statements will need analysing out (i.e. credit liabilities, debit expenses/directors loan accounts) to take into account the transactions, the payment is then credit bank debit creditors to remove the liability once it has been paid.
Kind regards
Steve0 -
Thank you. There are no transactions on the credit card so its purely payments to reduce the balance.
Will this be the same for the mortgage payment?
You have been very helpful once again0 -
The payments to the credit card company should be offset against the liability in the balance sheet. The interest charged by the credit card co can be put to bank/credit card charges in the P&L account and credited to the liability in the balance sheet.
The mortgage instalments always contain two component parts; capital and interest. The interest part of the payment can go to loan interest in the P&L, the capital part should be debited to the mortgage liability account in the balance sheet. The balance sheet will only show the CAPITAL value of the mortgage outstanding.
I hope that helps you.
Best regards
Steve0 -
It does help, thank you so much0
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