334 Notes Payable - Capital Loans

Liabilities

Long Term

Synopsis

Account 334 is established to record the long term portion of outside loans which are intended to be long term capital of the company. Amounts due within the next 12 months (current portion) should recorded in Account 314, Notes Payable – Other.

Debits	Credits
Principal payments on loans	Notes payable to banks and other financial institutions

Example 1

Record the receipt of proceeds of a bank loan.

Journal: Cash Receipts

Entry:		Debit	Credit
Account 201	Cash on Hand	$250,000
Account 334	Notes Payable - Capital Loans		$250,000

Example 2

Accrue monthly interest on bank loan.

Journal: Standard Entries

Entry:		Debit	Credit
Account 79*	Interest - Notes Payable (Other)	$1,250
Account 320	Interest Payable		$1,250

Example 3

Payment of monthly interest payment on bank loan.

Journal: Cash Disbursements

Entry:		Debit	Credit
Account 320	Interest Payable	$1,250
Account 202	Cash in Bank		$1,250

Note:

* = Interest should be allocated across departments based on methods described in Distribution of Expenses section of this manual.

Notes on equipment should be recorded in Account 336 Other Notes & Contracts

Comments

A credit balance represents the liability on the note.

Amortization schedules should be maintained to allocate the principal and interest payments for notes with blended periodic payments due.