337 Other Notes - Owners
Liabilities
Long Term
Synopsis
Account 337 is established to record notes payable to equity owners of the dealership.
Debits |
Credits |
|
|
Example 1
Record the receipt of funds from the owner intended to be part of the long term permanent capitalization of the company.
Journal: Cash Receipts
Entry: |
|
Debit |
Credit |
Account 201 |
Cash on Hand |
$500,000 |
|
Account 336 |
Other Notes - Owners |
|
$500,000 |
Example 2
Payment of monthly interest to the owner on the note payable to her.
Journal: Cash Disbursements
Entry: |
|
Debit |
Credit |
Account 79* |
Interest - Notes Payable (Other) |
$2,083 |
|
Account 202 |
Cash In Bank |
|
$2,083 |
Note:
* = Interest should be allocated across departments based on methods described in Distribution of Expenses section of this manual.
Comments
A credit balance represents the liability on the obligations.
All note balances need to be supported by promissory notes.
Amortization schedules should be maintained to allocate the principal and interest
payments for notes with blended periodic payments due.