The Chart of Accounts
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?
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.
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