Sage 50 Accounts - Can you post a single journal entry to balance an existing journal entry? Trying to balance a bridging loan paid into my account

Sage 50 Accounts - Can you post a single...

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Hi,

I paid for a property a long time ago in full using cash (no mortgage). I'm in the process of trying to expand the property portfolio so took a bridging loan against the property. I've had £25,270 paid into my bank account in the form of a bridging loan and have processed this as a bank receipt and allocated it to nominal 2330 mortgages as I expect the bridging loan to last just over a year. How do I then debit nominal 0010 freehold property to balance it out?

Thanks, Michael.

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By bro0010
19th Nov 2013 14:03

I think you're already balanced...

If I understand you correctly, you've just done Dr Bank 25270 and Cr Mortgages 25270.  That is that transaction fully taken care of.  If you then buy another property, a separate transaction, you'd Dr Freehold Property and Cr Bank.

I presume the original property was Dr Freehold Property Cr Bank when you bought it for cash.

Does that answer your question?

 

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By F1MLB
19th Nov 2013 14:12

Hi,

Thanks for your help.

Sorry, I should have explained. I've only recently started using Sage and I've never originally recorded the property on the balance sheet (or bank account) as it's from years ago. I think I need to debit nominal 0010 freehold property for £25,270 but I'm unsure how to do it. If I don't do it then how do I get the property to show on the balance sheet as a fixed asset?

Sorry for any confusion.

Thanks, Michael.

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paddle steamer
By DJKL
19th Nov 2013 14:29

Postings

The loan  of £25,270 looks posted correctly as already advised by another poster.

To bring in the original property  you now need to post its original cost (plus legals/ stamp duty etc on purchase) The loan amount you have received secured against it is not relevant to its carrying cost.

So:

Dr Property (at original cost) N/L 0010        £xxxxxxxxxxx

Cr Opening capital N/L  ????                                              £xxxxxxxxxxx

 

I presume you are a sole trader and your "business" is property letting/investment, if not then the above might not be correct.

If introduced at cost during the year (i.e) it was not part of the business at the end of last year, then the credit might be to "capital introduced" not opening capital as stated above.

Without knowing the legal form of your business it is a little tricky to be accurate with advice. It would also help to know if the business had any form of balance sheet prepared for the previous year or were its prior year records just income and expenses for say a tax return? 

DJKL

 

 

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By andrew1211
19th Nov 2013 14:31

Dr property Cr capital introduced assuming you are a sole trader or partnership.

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By F1MLB
19th Nov 2013 14:34

Sorry, should have mentioned that, it's a limited company.

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paddle steamer
By DJKL
19th Nov 2013 14:38

Sorry, late thought re possible loan correction?

Was the loan for £25,270 or was the loan actually for maybe say £26,000 with bank fees etc  of £730 deducted from the amount you actually received? If this was the case you will need to correct the loan posting something like this:

 

Dr Bank charges/ arrangement fees say £730

Cr Loan                                                 say £730

 

To make the opening loan balance correct.

 

Quite often with bank loans etc what is actually received is not the loan value.

DJKL

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By F1MLB
19th Nov 2013 14:44

DJKL - You're right, I totally forgot about that because I was thinking about the balance sheet entries too much. I will correct that now. Can you clarify that given I'm a limited company, what nominal should I credit after debiting 0010 freehold property?

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David Winch
By David Winch
19th Nov 2013 14:48

Ownership

Who owns the property - yourself or the ltd co?

David

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paddle steamer
By DJKL
19th Nov 2013 14:54

A Limited company raises some questions

I think we need a bit more information:

1.How did the company pay for the original property/ has the company paid for the property or did you  as an individual pay on behalf of the company?

2.Is the title to the property in name of the company ?

3. How long has the company existed, has it always owned the property or is this you transferring it to the company?

4. Hasthe companyt yet prepared and lodged any accounts?

5. This property, has it been let out for a number of years, if so who has declared the income, the company or you?

Without a much fuller disclosure nobody can really give you much useful advice as we are all in the dark.

DJKL

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By andrew1211
19th Nov 2013 15:02

Only ends up on the B/S if the limited company owns it!

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By F1MLB
19th Nov 2013 17:32

Clarification

Hi,

There are 14 properties in total and legal ownership is a mixture of myself and my father. We are both directors/shareholders of the limited company. By mixture I man I own some and he owns some, none of them are in joint names.

1. The funds to purchase this particular property come from the limited company bank account but the property is in my personal name.

2. No, my personal name

3. The company has been incorporated since 28th June 2013

4. Not yet, see point 3

5. In the past we have declared the rental income personally but after meeting with our accountant we are now putting the rental income through the limited company by letting the properties to the limited companies and then subletting them to tenants (forget mortgage company policy for the sake of this post).

Thanks, Michael.

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Replying to Tim Vane:
paddle steamer
By DJKL
19th Nov 2013 18:43

You need to see your accountant

F1MLB wrote:

Hi,

There are 14 properties in total and legal ownership is a mixture of myself and my father. We are both directors/shareholders of the limited company. By mixture I man I own some and he owns some, none of them are in joint names.

1. The funds to purchase this particular property come from the limited company bank account but the property is in my personal name.

2. No, my personal name

3. The company has been incorporated since 28th June 2013

4. Not yet, see point 3

5. In the past we have declared the rental income personally but after meeting with our accountant we are now putting the rental income through the limited company by letting the properties to the limited companies and then subletting them to tenants (forget mortgage company policy for the sake of this post).

Thanks, Michael.

 

I am sorry, with this one I have to give up.

Your earlier posts said the property was purchased some considerable time ago and you were taking bridging against it to enable the purchase of a further property. The bridging came in to the Limited Company bank account and you were advised re the posting to the nominal ledger. You then asked how the property, over which the bridging was secured, should be posted to the nominal ledger.

What you have now said is that the company does not own this property, the company was only set up in June 2013 and leases the property from you. If this is the case then really the bridging is surely in your name, not the company's, and ought not to have gone into the company. If you have put the money you have personally borrowed, secured against the property you personally own, into the company, then really that is a loan from you, the director, to the company, in which case the only entry into the company's books would be:

Dr  Bank

Cr Director's Loan

The property should only be reflected in the Company's balance sheet if the Company owns the property, the mortgage should only be reflected in the Company's balance sheet if the Company owes the funds to the bank, from your answers this does not appear to be the case.

I think you need to go to your accountant and get him to fully explain what entries ought to be in the books of each of the three legal entities, being:

You, Your Father and the Limited Company.

 

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David Winch
By David Winch
19th Nov 2013 19:46

Accountant
Go through all this with your accountant. If you do not then you risk making rather a mess of this - and possibly incurring substantial & avoidable tax liabilities.

David

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By F1MLB
19th Nov 2013 20:52

Thanks for your comments, I will take advice as suggested. Just out of interest, if this was all straight forward and through the limited company, what nominal would I credit after debiting freehold property?

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David Winch
By David Winch
19th Nov 2013 21:52

Easy

You said that the money to purchase the property came from the company bank account.  If the property had been purchased at that time by the company the entries would be debit freehold property, credit bank account.

If the purchase at that time was in the name of a director then the entries at that time would have been debit director's loan account, credit bank account.  If that property were later transferred into the company's name the entries to reflect that transfer would be debit freehold property, credit director's loan account.

David

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By F1MLB
22nd Nov 2013 12:33

Thank you everyone for your help, much appreciated.

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