What are the correct accounting entries for tax & insurance pmts from a nonaccrual loan?
Sunday, 30. May 2010
The loan has not been charged off yet. However taxes and an insurance payment are due. This is a real estate loan. The loan balance is equal to 100% of the equity, as the property value has declined.
Should I charge the loan balance keeping the "carrying charges" with the loan, so when we do charge it off, I have all of the costs? Thank you all
Definitions – Charged off>a loan paid off by a reserve held by the financial institution because of customer default.
Taxes>Real Estate Property Taxes
Insurance>Property Insurance
Nonaccrual>no longer taking earned interest into income as the loan is not current.
Current>customer makes timely payment.
Serge M Says:
Your question is unclear and cannot be answered because it is poorly stated. What does "charged off" mean? A charge is a debit. What does "tax and insurance pmt from a nonaccrual loan" mean? You have to restate your question in precise terms and provide a good description of the current facts.