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Recording debt service payment
04-23-2010, 02:17 PM
Post: #1
Recording debt service payment
Being retired, I work part time as bookkeepeer for a church and report directly to the senior pastor. My background includes a B.A. degree including 24 hours in accounting and 38 years experience mostly at the corporate accounting level. The senior pastor micromanages the accounting activities and is clearly lacking in accounting basics and theory. She prepared the 2010 budget pretty much by herself, did not ask me to review the budget before it was submitted to council for approval. For the debt retirement expense account, she combined the interest and principal amounts. Now as the payments are being made in 2010, I am recording the interest to expense and the principal to the mortgage liability account. She now realizes the debt retirement expense account will begin to show an underrun with the principal part of the payment going to the liability account. She is upset that the underrun in the budget will give a false sense of budget funds avaiable and is insisting that I make some kind of entry each month to offset the underrun. I told her the underrun is due to how the budget was developed and cannot be helped. I said I will add a note or comment explaining the underrun and that should suffice. But because of her micromanaging ways, she will not let up and will try to force me to make some kind of entry on the books which I believe is not correct.
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04-23-2010, 04:53 PM
Post: #2
 
Dear pgc, If revision is not possible to be made then your approach will surely serve the purpose, i.e. to show a note that principal is inclusive of interest. Since it is only a budget and not likely to be incorporated in accounts anywhere. However, it would have been prudent to be rectified, had it not been budget.

Regards,

Ajnabi.
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