When a loan is set up in Farm Works Short Term (amount due within 365 days) and Long Term (amount due after 365 days) accounts are automatically created. The combination of the Short and Long Term equals the current balance on the loan. When a loan payment is made, Farm Works will first reduce the Long Term portion of the loan until the balance is zero and then pays to the Short Term portion.
Loans should not have negative balances, though it sometimes happens. To correct the balances:
- Determine what the loan balances should be on a certain date (such as 12/31/xx).
- Print an Accrual Trial Balance as of that date.
- Using the trial balance, compare the Short and Long Term balances to determine the amount by which each need to be adjusted.
- In the Payments and Purchases window (Accounting, Payments & Purchases, Record Payments & Purchases), select a Vendor (ie: Adjustments, My Bank, or Misc. Vendor), enter the Date (12/31/xx), and enter a Description (such as "correcting loan balances").
- Click on the $(Expenses and Other Payments) button.
- Select “Other Accounts”. Highlight the first loan account to be corrected.
- Correcting the balance:
- To decrease the balance, enter a positive number equal to the adjustment value in the amount box and click OK.
- To increase the balance, enter a negative number equal to the adjustment value in the amount box and click OK.
- Repeat steps 5, 6 and 7 for each account to be corrected.
- Once all adjusting entries have been made, the Payments and Purchases window should be in balance with the difference at the bottom of the screen being $0.00.
- Click on “Record” to finish the transaction.
The above could be accomplished through a manual journal entry, but we recommend using Payments and Purchases so if you make a mistake, it can be easily voided. |