Current Portion of Long Term Debt

The current portion of long term loan or long term debt is a current liability. It is the amount of debt principal repayable within 12 months of the balance sheet date. The current portion of long-term debt is not the same as short term debt.

Current Portion of Long Term Debt April 12th, 2018

How to Calculate a Mortgage Payment

A mortgage is an interest in a property that is transferred from a borrower (the mortgagor) to a lender (mortgagee) to as security for a mortgage loan. If the lender does not repay the loan then the lender can under certain circumstances take the property.

As we have a series of periodic payments from the lender to the borrower and a periodic compounding interest rate, the mortgage payment can be regarded as an annuity.

How to Calculate a Mortgage Payment November 6th, 2016

How to Calculate an Outstanding Loan Balance

As regular payments will clear a loan balance over the term, the present value (PV) of the payments must be equal to the value of the loan. It follows that the remaining balance on an loan can be calculated by calculating the present value (PV) of the outstanding loan repayments.

How to Calculate an Outstanding Loan Balance November 6th, 2016

Loan Repayment – Principal and Interest

A business obtains a loan of 500 at an annual interest rate of 6% to be repaid in 3 annual installments of 187.05 at the end of each year. The loan repayments are split between principal and interest before the bookkeeping journal entries are made.

Loan Repayment – Principal and Interest November 6th, 2016

Debt Finance in Accounting

Debt finance is that part of your business finance which is made by way of debt. Debt finance is usually secured on business assets and sometimes personal assets of the owner. The debt finance is provided by a lender and your business is termed the borrower.

Debt Finance in Accounting September 28th, 2017

A business applies to a bank and receives a loan of 25,000. The money is paid direct to the bank current account of the business.

The double entry bookkeeping journal entry to show the business receive a loan into its bank account is as follows:

Receive a Loan Journal Entry November 6th, 2016

Accounting for Capital Leases Calculator

This accounting for capital leases calculator will help a business to produce the monthly accounting journals required to record capital leases.

The rental payments on a capital lease are split between principal and interest when posted to the accounting records. As the lease liability reduces each month the interest will reduce and the principal / interest split changes.

Accounting for Capital Leases Calculator November 6th, 2016

Finance Lease Accounting Journal Entries

The finance lease accounting journal entries below act as a quick reference, and set out the most commonly encountered situations when dealing with the double entry posting of finance or capital leases.

Finance Lease Accounting Journal Entries August 18th, 2017

Capital Lease Accounting

Capital lease accounting deals with the treatment of an asset rented by a business under the terms of a capital lease agreement.

A capital lease or finance lease is an agreement between the business (lessee) to rent an asset from a lessor. The lessor (lease company, finance company etc.) owns the asset, and the business rents the asset in return for a periodic rental payment. The business never owns the asset, at the end of the term it is returned to the lessor or a secondary period of rental is entered into.

Capital Lease Accounting August 18th, 2017

Debt vs Equity in Accounting

It is important for a business to maintain the correct level of debt vs equity. The ability of a business to take on debt is limited by it’s ability to pay the interest charges and make the repayments.

However, debt should not be considered a bad thing, if used correctly if can greatly improve the return to the owners of the business.

Debt vs Equity in Accounting September 20th, 2017