How to represent loans to other parties

[Matt Seburn]

I'm new to ledger and don't have any formal training in accounting.
I've read the docs, and I think I understand things in general, but
I'm having a hard time figuring this one out.

How do I represent the situation where I loan someone else money? The
specific situation I have in mind involves buying someone for
something out of my chequing account, and then receiving cash as
repayment. How do I (a) properly record the loan in the first place,
and (b) mark it as repaid without necessarily depositing the funds
into my account?

For example, I can record the initial loan like so:

2012/01/03 Some Store
Loans:Some Friend $10.95
Assets:Bank:Chequing

Since the money's coming out of my chequing account, it must be
debited, which implies that the "loans" account must be credited.

And I can record the incoming cash like so:

2012/01/03 Cash from Some Friend
Income:From Some Friend $-40
Loans:Some Friend $-10.95
Assets:Petty Cash

I have to debit the loans account, to "undo" the initial record. But,
then it combines with the incoming cash, and petty cash is shown as
having $50.95 instead of the difference between the two.

What am I doing wrong?

Thanks!

[Doug Philips]

On 2012 Jan 3, at 12:04 AM, Matt Seburn wrote:

And I can record the incoming cash like so:

 

2012/01/03 Cash from Some Friend
Income:From Some Friend  $-40
Loans:Some Friend  $-10.95
Assets:Petty Cash

 

I have to debit the loans account, to "undo" the initial record.  But,
then it combines with the incoming cash, and petty cash is shown as
having $50.95 instead of the difference between the two.

Not sure about the terminology but if what you're trying to do is record
that Some Friend gave you $40, and you recognized $10.95 of it as a loan
repayment, then you might want:

2012/01/03 Cash from Some Friend
   Income:From Some Friend

   Loans:Some Friend  $-10.95
   Assets:Petty Cash   $40.00

and let ledger figure out the Income part. It can only calculate one missing
value in any transaction, but in this case, that's fine.

Hope this helps,
  -Doug

[John Wiegley]

>>>>> Matt Seburn <mattseburn-Re5JQ...@public.gmane.org> writes:

> How do I represent the situation where I loan someone else money? The
> specific situation I have in mind involves buying someone for something out
> of my chequing account, and then receiving cash as repayment. How do I (a)
> properly record the loan in the first place, and (b) mark it as repaid
> without necessarily depositing the funds into my account?

I consider loans to other people as an asset held at another location, so it's
never "income" when the money is simply transferred back to me. It's my money
either way. Now if the loan gets forgiven, then I transfer it to an Expense.

John

[Peter Keen]

On Tue, Jan 3, 2012 at 9:01 AM, John Wiegley <jwie...@gmail.com> wrote:
> I consider loans to other people as an asset held at another location, so it's
> never "income" when the money is simply transferred back to me.  It's my money
> either way.  Now if the loan gets forgiven, then I transfer it to an Expense.

That's exactly what I do:

2012/01/01 * Loan to Bob
Assets:Receivable:Bob $50.00
Assets:Checking

2012/01/01 * Bob Loan Repayment
Assets:Checking $10.00
Assets:Receivable:Bob

I treat bills that my girlfriend and I split the same way. I have an
automated transaction that matches particular categories of expenses
and transfers half of them from that particular expense account into
her receivable account, and then I have a little script that that
dumps the outstanding entries and emails it to her.

[Matt Seburn]

On Tue, Jan 3, 2012 at 12:07 PM, Peter Keen <peter...@bugsplat.info> wrote:
> On Tue, Jan 3, 2012 at 9:01 AM, John Wiegley <jwie...@gmail.com> wrote:
>> I consider loans to other people as an asset held at another location, so it's
>> never "income" when the money is simply transferred back to me.  It's my money
>> either way.  Now if the loan gets forgiven, then I transfer it to an Expense.
>
> That's exactly what I do:
>
> 2012/01/01 * Loan to Bob
>    Assets:Receivable:Bob      $50.00
>    Assets:Checking
>
> 2012/01/01 * Bob Loan Repayment
>    Assets:Checking              $10.00
>    Assets:Receivable:Bob

Thanks everyone, that helps a lot!