The Chart of Accounts Question

by Donna
(Patchogue, NY)

The Chart of Accounts

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?


Thank you.

Comments for The Chart of Accounts Question

Average Rating starstarstarstarstar

Click here to add your own comments

Jun 06, 2018
Rating
starstarstarstarstar
The Chart of Accounts Answer
by: Stephanie

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 COA question, Donna.

Click here to add your own comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Chart of Accounts Questions.


Please subscribe to my monthly newsletter, Bookkeeping Basics E-zine. It tells you every month about the new information that I have added, including some great tips and advice from myself and other Bookkeeping Basics readers.

Enter Your E-mail Address
Enter Your First Name (optional)
Then

Don't worry — your e-mail address is totally secure.
I promise to use it only to send you Bookkeeping Basics E-Zine.

Like Bookkeeping-Basics.net?