Property purchase with loan funds

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  • Updated 1 year ago
I am trying to work out how to enter the purchase of a property using funds from a bank loan. The property purchase and loan are both in company names.

I've set the property up as a fixed asset and also set up the loan as a long term liability - but I can't work out how to enter the loan drawn down transactions. Would have thought I could write a cheque from the long term liability account, but this doesn't seem to be an option?
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Christina McIntosh

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Posted 1 year ago

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Kevin Russell, Accredited Partner

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Correct it isnt an option in the ordinary sense. Customarily you would enter it as a journal entry. You could enter it on a cheqie with two lines one to the purchase and the second line as a negative to the loan account (increasing the balance) with a cheque value of zero. It sounds complicated but it really isnt. Call me if you wish to discuss. Kevin t: 0407744914
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David

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Hi Christina,
I would suggest your prepare a General Journal entry, as you will have other amounts to journal as well, such as any adjustments at settlement. You will have to go back to basic Debit and Credits to sort this one !
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Kevin Russell, Accredited Partner

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Definitely agree David.
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Christina McIntosh

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Thanks to both of you. Have worked my way through the journal entry and I think I've got it sorted (all balances anyway!). Will get the accountant to check and make sure they have all the settlement statements in any case.