The Chart of Accounts

by Donna
(Patchogue, NY)

My company just purchased a Gym. We took out a mortgage on the building/property. How do I classify it in the chart of accounts for my mortgage payments?

Thank you.


The mortgage on the building/property should be classified as a long-term liability on the chart of accounts. You would accomplish this by first Debiting the Building Asset account and Crediting the Mortgage Payable long-term liability account.

Then when you make a mortgage payment, you will Credit your Bank Asset account and Debit the principal portion of the payment to your Mortgage Payable long-term liablity account and Debit the interest portion of the payment to your Mortgage Interest expense account.

Thank you for your question, Donna.