Is this bookkeeping correct?

I made up a bookkeeping problem for myself:

Larry Lender loans Bob Borrower $1000, with four origination points, taken out of the cash value of the loan (ie the check is actually for $960). The loan is at 8.25% (the current prime rate) monthly, with a term of 24 months, amortized according to the Rule of 78. Larry then enters into a credit default swap with Izzy Insurer for the asset value of the loan, plus $97 (the last month's payment) for 100 bps/month, for the entire term of the loan. Assuming Larry starts w/ a $4000 bank balance, write a copy of his books before he recieves the first loan payment or pays the CDS monthly fee.

Here's my answer:

Cash Item Dr Cr Bal

---------------------------------------------------------- Start 0 Bank Bal 4000 4000 Loan check 960 3040

Assets Item Dr Cr Bal

-------------------------------------------------------------- Start 0 Bank Bal 4000 (4000) Loan Value 1000 (5000)

A/R Item Dr Cr Bal

--------------------------------------------------------------- Start 0

1LoanPay 96.97 96.97

A/P Item Dr Cr Bal

------------------------------------------------------------------- Start 0 AccrCDS 10.97 (10.97)

Accr. Principal Item Dr Cr Bal

----------------------------------------------------------------- Start 0

1LoanPr 9.21 9.21

Accr. Interest Item Dr Cr Bal

------------------------------------------------------------------ Start 0

1LoanInt 106.18 (106.18)

Expenses Item Dr Cr Bal

--------------------------------------------------------------- Start 0 CDS 10.97 10.97

Income Item Dr Cr Bal

-------------------------------------------------------------- Start 0 OrigFee 40 (40)

Trial Balance Item Dr Cr

------------------------------------------------------ Assets 5000 Bank Bal 4000 Loan check 960

1LoanPay 96.97 AccrCDS 10.97 1LoanPr 9.21 1LoanInt 106.18 CDS 10.97 OrigFee 40

There's a discrepancy of $2000. What have I done wrong? Oh, and about why Accrued Principal has a debit of 9.21, that's what my calculator says. The principal should increase. Here:

formatting link
Thanks!!!!!

Reply to
DarkProtoman
Loading thread data ...

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.