Appendix H - Accounting Methods

Contract Collector for Windows can operate on either Cash Accounting or Accrual Accounting. Cash Accounting is based on when a payment is actually received. Accrual Accounting works based on when the payment is earned, not when it is actually paid. The following is an illustration of how the two accounting methods work in Contract Collector:

Type of Transaction:

  1. New Contract Entered in Contract Window

  2. Auto Charge processing payment due

  3. Borrower makes payment, payment entered in Payment Window

Cash Accounting:

  1. no processing

  2. Receivables charge line

debit: Cash 1100

credit: Principal Income 4100

Interest Income 4200

  1. Receivables payment line

debit: Cash 1100

credit: Principal Income 4100

Interest Income 4200

Accrual Accounting:

  1. Adjustments Journal entry

debit: Long Term AR 1350

credit: Equity 3100

  1. Receivables charge line (charge for entire payment amount)

debit: Short Term AR 1300

credit: Long Term AR 1350

  1. Receivables payment entry for entire payment:

debit: Cash 1100

credit: Income Principal 4100

Income Interest 4200

Adjustments Journal entry for principal:

debit: Equity 3100

credit: Short Term A/R 1300

Adjustments Journal entry for interest:

debit: Long Term AR 1350

credit: Short Term AR 1300