NetLoan - Reason Behind Clearing Accounts

Use Case: The purpose of this article is to explain the use of the different recommended clearing accounts in NetLoan.

Loan Proceeds & Orig. Fee Clearing Account

The Loan Proceeds & Orig. Fee Clearing Account is used to record origination fees that are incurred at or before the origination of the loan as well as the loan proceeds.

Origination Fees (Borrower) - Values input here are the cash paid for origination fees with the offset to the Loan Proceeds & Orig. Fee Clearing Account. The first entry in the system would be the following and be made by the company as you record the fees: 

   Debit: Loan Proceeds & Orig. Fee Clearing Account

   Credit: Cash

This balance will be in the clearing account until the loan is commenced and the initial journal entry is run. The initial journal entry will reverse out the Loan Proceeds & Orig. Fee Clearing in the following entry: 

   Debit: Capitalized Loan Origination Fees

   Credit: Loan Proceeds & Orig. Fee Clearing Account

Origination Fees (Lender) - Values input here are the cash received for origination fees with the offset to the Loan Proceeds & Orig. Fee Clearing Account. The first entry in the system would be the following and be made by the company as you record the fees: 

   Debit: Cash

   Credit: Loan Proceeds & Orig. Fee Clearing Account

This balance will be in the clearing account until the loan is commenced and the initial journal entry is run. The initial journal entry will reverse out the Loan Proceeds & Orig. Fee Clearing in the following entry: 

   Debit: Loan Proceeds & Orig. Fee Clearing Account

   Credit: Capitalized Loan Origination Fees 

Loan Proceeds (Borrower) - Values input here are the cash received for the loan with the offset to the Loan Proceeds & Orig. Fee Clearing Account. The first entry in the system would be the following and be made by the company as you record the loan: 

   Debit: Cash 

   Credit: Loan Proceeds & Orig. Fee Clearing Account

This balance will be in the clearing account until the loan is commenced and the initial journal entry is run. The initial journal entry will reverse out the Loan Proceeds & Orig. Fee Clearing in the following entry: 

   Debit: Loan Proceeds & Orig. Fee Clearing Account

   Credit: Loan Liability

Loan Proceeds (Lender) - Values input here are the cash lent for the loan with the offset to the Loan Proceeds & Orig. Fee Clearing Account. The first entry in the system would be the following and be made by the company as you record the loan: 

   Debit:  Loan Proceeds & Orig. Fee Clearing Account

   Credit: Cash

This balance will be in the clearing account until the loan is commenced and the initial journal entry is run. The initial journal entry will reverse out the Loan Proceeds & Orig. Fee Clearing in the following entry: 

   Debit: Note Receivable

   Credit: Loan Proceeds & Orig. Fee Clearing Account

Loan Payment Payable Clearing Account

The Loan Payment Payable Clearing Account is where actual payments are cleared against monthly payments from the subledger amortization entries. At the end of a period this account should net to zero.

Bill - when a bill is created for a loan, the following journal entry should be recorded:

   Debit: Loan Payment Payable Clearing Account

   Credit: Cash/Accounts Payable

Monthly Payment - The following entry will be booked as part of the monthly amortization process:

   Debit: Loan Liability

   Debit: Interest Expense

   Credit: Loan Payment Payable Clearing Account

Loan Payment Receivable Clearing Account

The Loan Payment Receivable Clearing Account is where actual payments are cleared against monthly payments from the subledger amortization entries. At the end of a period this account should net to zero.

Invoice - when an invoice is created for a loan, the following journal entry should be recorded:

   Debit: Cash/Accounts Receivable

   Credit: Loan Payment Receivable Clearing Account

Monthly Payment - The following entry will be booked as part of the monthly amortization process:

   Debit: Loan Payment Receivable Clearing Account

   Credit: Note Receivable

   Credit: Interest Income

Transition Entry/Go-Live Clearing Account

The Transition Entry/Go-Live Clearing Account is used at the go-live date to get the correct balance sheet information presented in the NetSuite environment. 

Automatic System Entry (Borrower) - when the Go-Live Entries are run for the loans, the following journal entry will be recorded:

   Debit: Transition Entry/Go-Live Clearing Account 

   Credit: Loan Liability

Manual Entry - The following entry is an example of what could be booked by the company to remove the loan information that has previously been recorded:

   Debit: Loan Liability 

   Credit: Transition Entry/Go-Live Clearing Account 

Automatic System Entry (Lender) - when the Go-Live Entries are run for the loans, the following journal entry will be recorded:

   Debit: Notes Receivable

   Credit: Transition Entry/Go-Live Clearing Account

Manual Entry - The following entry is an example of what could be booked by the company to remove the loan information that has previously been recorded:

   Debit: Transition Entry/Go-Live Clearing Account 

   Credit: Note Receivable