Seller financing setup

BillUnderhill

My company recently bought a property that is financed by the seller. There was a small down payment (say $10K) that was put in by an owner and the rest ($90K) was financed. There was no money from the seller at closing. There is a payment ($500) monthly for the mortgage.

How do I set this up? I am hung up on the seller not presenting any funds.

Thanks!

Mikeg

BillUnderhill,
You will need to do a journal entry to get the property on the books. I would have the following accounts set up under Accounting/Chart of Accounts
Property Plant and Equipment
Building
Land
Long Term Liabilities
Mortgage payable
Assuming the 10k came directly from the owner and land value is 10k then the journal entry would be:
Debit Building 90,000
Debit land 10,000
Credit Mortgage 90,000
Credit Owner Contribution 10,000

With regards to mortgage payment. They should be split between Principal and Interest Expense.