335 Mortgages Payable & Facility Related Loans

Liabilities

Long Term

Synopsis

Account 335 is established to record the amount due beyond the next 12 months for loans secured by real estate used by the dealership.  The account is also to be used for other funding that was used to make improvements to the facility including funding that is being held as unearned income.  Amounts due within the next 12 months (current portion) should be recorded in Account 314, Notes Payable - Other.

Example 1

Record the proceeds from a new mortgage on the dealership property.  The old mortgage of $3,005,490 was paid off with part of the proceeds.  The dealership also incurred $15,278 of costs associated with obtaining this mortgage.

Journal: Cash Receipts

Example 2

Record the monthly mortgage payment of $38,051 that is due for the month.  The amount of $15,551 is applied to the principal and the interest is $22,500.

Journal: Cash Disbursements

Example 3

Record the amount of $455,683 for the real estate mortgage that is due within the next twelve months.

Journal: General Journal

Comments

A credit balance: represents amounts NOT DUE within 12 months from the current operating report date and secured by real estate or funded real estate improvements.

Professional advice should be obtained regarding tax treatment of unearned income.