I entered line of credit as liability & transferred funds to checking. It is increasing line of credit amount and also increasing the checking. Shouldn't it deduct from line of credit? I checked to make sure I transferred FROM line of credit & I did
When you take a draw from the line of credit, it increases the amount you owe. when you make a payment on the LOC, then it reduces the balance due.
PLEASE mark this answer as solved (click the button under the answer in the lower, right corner) or post additional questions. Thanks so much!!!
i actually have another question in this regard.. my LOC in in one company (as a 'realty ' account the line being based on the ownership of the lots purchased to build new homes) but the transfers are made to the operating account of another company (the construction company) actually incurring the expense of building the homes.. since it's two different companies, i can't use the 'transfer funds' option..
You will need to set up two accounts. In the company that is transferring the cash to the other company, you will need to set up a Due from Company XXX....the account would be an Other Asset.
In the company receiving the funds, you will set up a Due To Company X... the account would be a current liability account.
