Comments on: Contra Account http://business-accounting-guides.com The Fast and Simple Guide to Accounting Sun, 06 May 2012 11:55:12 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: patrick http://business-accounting-guides.com/contra-account/comment-page-1/#comment-1408 patrick Fri, 23 Dec 2011 17:07:17 +0000 http://business-accounting-guides.com/?page_id=679#comment-1408 appreciate the help. pc appreciate the help.
pc

]]> By: Kenneth Meunier http://business-accounting-guides.com/contra-account/comment-page-1/#comment-1386 Kenneth Meunier Tue, 20 Dec 2011 17:39:57 +0000 http://business-accounting-guides.com/?page_id=679#comment-1386 Hi Patrick, You can just record the interest as an interest expense. A good example of how this works is under <a href="http://business-accounting-guides.com/adjustingentries/" rel="nofollow">Adjusting Entries Illustrated</a> where there is an example of recording interest for land. When you actually pay the interest, you can debit interest payable and credit cash (the interest expense remains for the period). If you have the security deposit as your asset, then the investment is an asset with interest accrued in credit account interest revenue (debit interest receivable or cash). Kenneth Hi Patrick,

You can just record the interest as an interest expense. A good example of how this works is under Adjusting Entries Illustrated where there is an example of recording interest for land. When you actually pay the interest, you can debit interest payable and credit cash (the interest expense remains for the period).

If you have the security deposit as your asset, then the investment is an asset with interest accrued in credit account interest revenue (debit interest receivable or cash).

Kenneth

]]> By: patrick http://business-accounting-guides.com/contra-account/comment-page-1/#comment-1372 patrick Sun, 18 Dec 2011 17:38:38 +0000 http://business-accounting-guides.com/?page_id=679#comment-1372 kenneth i did pretty well in high school accounting class, but that was more than a few years ago and now i'm attempting the books for my investment in a santa cruz, ca, triplex having done essentially no bookkeeping in the meanwhile. Not much is said, about security deposits, in books i have. Thanks for your kind correction. patrick kenneth
i did pretty well in high school accounting class, but that was more than a few years ago and now i’m attempting the books for my investment in a santa cruz, ca, triplex having done essentially no bookkeeping in the meanwhile.
Not much is said, about security deposits, in books i have.
Thanks for your kind correction.
patrick

]]> By: patrick http://business-accounting-guides.com/contra-account/comment-page-1/#comment-1371 patrick Sun, 18 Dec 2011 17:24:58 +0000 http://business-accounting-guides.com/?page_id=679#comment-1371 Historical interest rates are listed below: Interest Rates For County of Santa Cruz, Capitola, Watsonville, and the City of Santa Cruz January 1, 2002 - December 31, 2002 1% January 1, 2003 - December 31, 2003 .58% January 1, 2004 - December 31, 2005 .32% January 1, 2006 - December 31, 2006 .43% January 1, 2007 - December 31, 2007 .34% January 1, 2008 - December 31, 2008 .31% January 1, 2009 - December 31, 2009 .23% January 1, 2010 - December 31, 2010 .10% January 1, 2011 - December 31, 2011 .06% The City of Capitola has no interest requirement for 2011. Thanks for the reply -- i'll send another email with apologies for my ignorance Historical interest rates are listed below:
Interest Rates For County of Santa Cruz, Capitola, Watsonville, and the City of Santa Cruz
January 1, 2002 – December 31, 2002 1%
January 1, 2003 – December 31, 2003 .58%
January 1, 2004 – December 31, 2005 .32%
January 1, 2006 – December 31, 2006 .43%
January 1, 2007 – December 31, 2007 .34%
January 1, 2008 – December 31, 2008 .31%
January 1, 2009 – December 31, 2009 .23%
January 1, 2010 – December 31, 2010 .10%
January 1, 2011 – December 31, 2011 .06%
The City of Capitola has no interest requirement for 2011.
Thanks for the reply — i’ll send another email with apologies for
my ignorance

]]> By: Kenneth Meunier http://business-accounting-guides.com/contra-account/comment-page-1/#comment-1356 Kenneth Meunier Thu, 15 Dec 2011 15:25:42 +0000 http://business-accounting-guides.com/?page_id=679#comment-1356 Hi Patrick. First show me where I can get some interest on my security deposit :) The interest expense would not be reversed since it is an actual expense recorded for the period. So the interest expense and interest payable can be listed separately to the security deposit amount owed as interest obligation on the funds deposited. When the interest is paid you could debit interest payable (or interest expense if paid immediately with cash) and credit cash. A contra account is generally a direct reduction not due to interest expense, which is an actual liability outside of the account, but other factors directly affecting the asset or liability value (e.g. bad debt, depreciation, etc.) Kenneth Hi Patrick. First show me where I can get some interest on my security deposit :)

The interest expense would not be reversed since it is an actual expense recorded for the period.

So the interest expense and interest payable can be listed separately to the security deposit amount owed as interest obligation on the funds deposited.

When the interest is paid you could debit interest payable (or interest expense if paid immediately with cash) and credit cash.

A contra account is generally a direct reduction not due to interest expense, which is an actual liability outside of the account, but other factors directly affecting the asset or liability value (e.g. bad debt, depreciation, etc.)

Kenneth

]]> By: patrick http://business-accounting-guides.com/contra-account/comment-page-1/#comment-1355 patrick Thu, 15 Dec 2011 13:57:12 +0000 http://business-accounting-guides.com/?page_id=679#comment-1355 It seems that another example of a contra account would be an expense account associated with a security deposit (eg. rental property). The interest owed on a security deposit would show as a debit in the expense account until the tenant moved and the account settled. at that time, cash is debited and the expense account credited for the interest owed/paid. It seems that another example of a contra account would be an expense account associated with a security deposit (eg. rental property). The interest owed on a security deposit would show as a debit in the expense account until the tenant moved and the account settled. at that time, cash is debited and the expense account credited for the interest owed/paid.

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