Recording the Initial Deposit Acquired via a Loan

by Cory
(Westville, IN)

Our church has taken out a loan for some building improvements.

Obviously, we've recorded the debit to cash and credit to a new Loan Liability account.

My question is, do we need to record that same value in a fund? If yes, what would be the offset?

Comments for Recording the Initial Deposit Acquired via a Loan

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Oct 08, 2018
Fund Accointing
by: CPA, CMA, CGMA

Yes, you need to designate the cash for the specific purpose, if that was indeed the intent of the congregation/elders. You don’t say what software your church uses, but there may be a "class" option if you are using Quickbooks, or a "dimension" if Intacct or other software. This allows you to segregate funds obtained for specific reasons. Another, less accounting theory structured, would be to establish a new bank account strictly for the designated repairs,

Oct 09, 2018
Response to first comment
by: Cory

We use CDM+ by Suran Systems for churches. If I record this as a credit to a special fund, representing the reason/purpose why we took out the loan, what would I be debiting to offset that entry? I'm thinking it must be some other 'capital', so that we show a reduction in our total net worth. We used our church property as collateral for the loan, so maybe an offset to that value?

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