Our club had an outstanding loan made by one member at the
time we brought our data into the Bivio accounting system.
We haven't been able to create an "account" to record this
amount as a liability so that it appears correctly on our
balance sheet. Is there a method for doing this?

Kenneth C. Hoffman writes:
> Our club had an outstanding loan made by one member at the
> time we brought our data into the Bivio accounting system.
> We haven't been able to create an "account" to record this
> amount as a liability so that it appears correctly on our
> balance sheet. Is there a method for doing this?

We don't support loans directly. You can create multiple accounts:

http://www.bivio.com/hp/creating-accounts.html

Cheers,
Rob

Kenneth, for future reference, it is not good business, besides being an
accounting problem, to loan a member money, show it as a receivable, and
post payments to it. It would be far better to give the member a partial
withdrawal of the amount he needs, and let him reinvest as he is able to
bring his share in the club back up. Then you have nothing to fool with.
Gene Rooks, Space Coast Chapter.

Gene,

Thank you for your reply. I agree with your good judgment,
but if you read my original post again you will note that
the loan in question is FROM, and not TO, our member. This
is a historical issue, and in the future we would not plan
to borrow from our members either.
Regards

Gene Rooks wrote:
Kenneth, for future reference, it is not good business,
besides being an accounting problem, to loan a member money,
show it as a receivable, and post payments to it. It would
be far better to give the member a partial withdrawal of the
amount he needs, and let him reinvest as he is able to bring
his share in the club back up. Then you have nothing to
fool with.
Gene Rooks, Space Coast Chapter.

Thanks for the discussion, but as I said, the balance sheet
is an issue because the tax forms print out with a negative
cash balance and no liabilities. (we have used the same
method you suggested, before asking the question. This is
relevant for the the 1065 because, as Ira points out, we
have over $600K assets and therefore are required to
reconcile our beginning and ending balance sheets on the
form. In any event, I now know that we will have to
manually redo this portion of the 1065, which is fine, and
appreciate the discussion.

Rip West wrote:
> Ken,
>  
> I don't agree with most of the comments that have been
> written on this subject, including yours. There is nothing wrong with having a
> loan from a member.  If the intent was to advance the club some funds on a
> temporary basis, it should be shown as a loan. You do that by creating
> a new cash account called Loan from Member XXXX, and transferring the amount of
> the loan from the  new cash account to your regular bank account. The loan
> will show up as a credit balance in the cash accounts. I don't share your
> concern about this messing up your balance sheet. As Ira said, you won't be
> submitting the balance sheet to the IRS, but, even if you were, they can deal
> with a negative asset account, which, of course, is the same as a liability
> account.
>  
> I really disagree with the notion that you try to
> accomplish the same thing by crediting the loan amount from the member as a
> deposit which awards units. If this is done, the later withdrawal by the member
> will carry with it more or less units than originally awarded. This fact puts
> both the member and the rest of the club at risk as to what is going to happen
> to the club's unit value. If you want to pay the member intrerest, fine, but
> let's not compensate him by taking out less units than were awarded to him
> originally. And I'm sure that he doesn't want to withdraw more units than were
> originally awarded.
>  
> I think Ira's point is valid, but easily overcome by the
> partnership and/or loan agreement as to what happens in case of
> default.
>  
>  
> Rip West
> Saint Paul,
> MN

yes, of course, but I guess no one ever told that axiom to
Enron, Bear Stearns, etc.

Rip West wrote:

And as I said, that is not a problem. Let up a new account
'Loan to Member', and let the balance sheet show a negative
asset. Everything will balance, and the irs will not bounce
it back, because negative assets are liabilities the world
over.

 Rip West
 Saint Paul,
 MN