This is how a lease option should work: After securing the go-ahead from a mortgage broker and before moving in, your potential buyer will give you a healthy, nonrefundable deposit to go toward the down payment of the house -- typically, 3 to 5 percent of the purchase price.
The amount of interest that accrues on your loan is determined by a simple daily interest calculation: Your current principal balance Ã The number of days since your last payment Ã Interest rate factor = interest rate Ã· 365.25 (number of days in a year) = Your daily interest rate.
The journal entry to record the loan on the borrower's general ledger is as follows: Debit Cash 20,000 Credit Loan Payable 20,000. To calculate monthly interest on the loan, the company must multiply the principal by the annual interest rate. The result is then multiplied by the loan's time period.