Hello,
Hopefully someone has tried to do this same thing over the years.
1. Our company has deferred compensation liability accounts.
2. Each month a certain amount of salary is placed in this account as a
principal with a set interest rate with an amortization of 10 years with
disbursement at the end of the 10 year period.
3. To keep things simple lets say $1000 salary payment to this
deferred compensation liability account for each month of the year, with
10% intrest amortized yearly for ten years.
The schedule would look like below for each month:
start principal start balance interest end balance end principal
1 $1,000.00 $1,000.00 $100.00 $1,100.00 $1,000.00
2 $1,000.00 $1,100.00 $110.00 $1,210.00 $1,000.00
3 $1,000.00 $1,210.00 $121.00 $1,331.00 $1,000.00
4 $1,000.00 $1,331.00 $133.10 $1,464.10 $1,000.00
5 $1,000.00 $1,464.10 $146.41 $1,610.51 $1,000.00
6 $1,000.00 $1,610.51 $161.05 $1,771.56 $1,000.00
7 $1,000.00 $1,771.56 $177.16 $1,948.72 $1,000.00
8 $1,000.00 $1,948.72 $194.87 $2,143.59 $1,000.00
9 $1,000.00 $2,143.59 $214.36 $2,357.95 $1,000.00
10 $1,000.00 $2,357.95 $235.79 $2,593.74 $1,000.00
So, the first year each month we would record entries like this:
Debit Credit
Expenses:
Deferred compensation (Y1-P) $1000
Liabilities
Deferred compensation (Y1-P)
$1000
So, the first Quarter of a year would look like this:
January February
March
Debit Credit Debit Credit
Debit Credit
Expenses:
Deferred compensation (Y1-P) $1000
$1000 $1000
Liabilities
Deferred compensation (Y1-P)
$1000
$1000
In year two, each month we'd have to enter these entries:
Expenses:
Deferred compensation (Y2-P) $1000
Deferred compensation (Y1-Y1 Interest) $100
Liabilities
Deferred compensation (Y2-P)
$1000
Deferred compensation (Y1-Y1 Interest)
$100
In year three, each month we'd have to enter these entries:.
Expenses:
Deferred compensation (Y3-P) $1000
Deferred compensation (Y2-Y1 Interest) $100
Deferred compensation (Y1-Y2 Interest) $110
Liabilities
Deferred compensation (Y2-P)
$1000
Deferred compensation (Y2-Y1 Interest)
$100
Deferred compensation (Y1-Y2 Interest)
$110
And so on for 10 years...
Even with the easy math above this will get tedious *very* quickly.
In our actual real world case the amount of monthly principal will
fluctuate depending on
salary changes each year, and the interest rate will change quarterly
depending on the 10 year T note.
Is there a way to automate these transactions? I can schedule the
principal transactions because the monthly
principal contributions will be the same for given years salary, but I
don't know how to automate the interest
payment transactions since they are based on the principal and would
increase each year for each principal payment.
Thanks!
Roger Nathanial Ashby
*Principal Consultant, OpenWise *
Tel: (301) 744-9443
Fax: (202) 810-9128
We provide the tools for our clients to build a better world.™
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