338 Note Payable - Affiliated Companies
Liabilities
Long Term
Synopsis
Account 338 is established to record notes payable to entities that share common ownership with equity owners of the dealership.
Debits |
Credits |
|
|
Example 1
Record the receipt of funds from an affiliated company intended to be part of the long term permanent capitalization of the company.
Journal: Cash Receipts
Entry: |
|
Debit |
Credit |
Account 201 |
Cash on Hand Bank |
$750,000 |
|
Account 338 |
Other Notes - Affiliated Companies |
|
$750,000 |
Example 2
Payment of monthly interest to an Affiliated Company on the note payable to them.
Journal: Cash Disbursements
Entry: |
|
Debit |
Credit |
Account 79* |
Interest - Notes Payable (Other) |
$3,125 |
|
Account 202 |
Cash in Bank |
|
$3,125 |
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 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.