So we had a loan for an office property, let's say $500,000. We refinanced for $505,000 and received a check for $5,000. I'm not sure how to record the additional $5,000. Obviously it's a debit to cash, right? But then what would I credit? It was simply worded as the amount of the new loan that is in excess of what was required to pay off the old loan. These are also not exact amounts, but that's not important. Just trying to figure out how to record this properly. Thanks for any help!
USA Recording Excess Funds from Building Loan
- Thread starter mikep
- Start date
If old loan was $500,000
then the long way to record would be (just to make things clear)
Take out new loan for $505,000
DR Cash $505,000
CR Loan Payable <$505,000>
Payoff old loan
DR Old Loan $500,000
CR Cash <$500,000>
but they probably paid your old loan off directly for you and just sent you the $5,000 excess so the NET entry is
DR Cash $5000
DR Old Loan $500,000
CR New Loan<$505,000>
then the long way to record would be (just to make things clear)
Take out new loan for $505,000
DR Cash $505,000
CR Loan Payable <$505,000>
Payoff old loan
DR Old Loan $500,000
CR Cash <$500,000>
but they probably paid your old loan off directly for you and just sent you the $5,000 excess so the NET entry is
DR Cash $5000
DR Old Loan $500,000
CR New Loan<$505,000>