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De-classify Loans in Arrears

This feature enables booking of loans in arrears for a particular period to the respective GL accounts defined according to the age classes under System/Configuration/Loan product settings/Loan GL Accounts settings part 2. Declassification enables these amounts to appear on the balance sheet under assets (Financial report).

Note:

1. The ageing report is only a management report that shows the different age classes and the corresponding amounts where as declassification of loans in arrears books to the balance sheet under Assets (Financial report). Also these amounts are posted to the GL accounts that were defined during classification. The following table shows you the transactions that occur during classification and declassification of loans in arrears:

Balance sheet (Assets): We debit the assets..................................................................................GL account

Principal outstanding ..........................................UGX 5,000,000.........................................................00004.

Principal in arrears .............................................UGX 3,000,000

Principal not in arrears .......................................UGX 2,000,000

Classification of Loans in arrears (Ageing report for management)

You define the different age classes of the loans in arrears and the corresponding GL accounts on which the amounts will be booked when these loans are declassified to the balance sheet.


Age class.............................................................Amount..................................................................GL account

1 - 30 ..................................................................1,000,000.........................................................................00001

31 - 60 ................................................................1,500,000.........................................................................00002

61 - 90 ..................................................................500,000.........................................................................00003


Declassification of loans in arrears amounts (Balance sheet - Financial report)

Amount.......................................................................GL account

1,000,000.........................................................................00001

1,500,000.........................................................................00002

500,000...........................................................................00003

When the declassified loans are repaid, the following transactions take place:


Cr: 00004 ........................................................UGX 1,000,000
Dr: 00001 ........................................................UGX 1,000,000

Cr: 00004 ........................................................UGX 1,500,000
Dr: 00002 ........................................................UGX 1,500,000

Cr: 00004 ........................................................UGX 500,000
Dr: 00003 ........................................................UGX 500,000


You will able to print a report on repayments of declassified loans under the menu Loans\Portfolio Reports\Reports on Repayments\Declassified loans repayment report.

You have to declassify again to get a report with updated values.

How to declassify Loans in Arrears

To do this, you go to Accounting/De-classify Loans in Arrears and following screen appears

• Reporting date: Enter the date of declassification e.g. "31/12/2016".

Click on the Save button to view the report, the following dialog box appears:

Click on Yes button to display the report which will be similar to the one below:

Close the report to exit, the following dialogue appears:

Click on the Yes button so that the loan amounts are declassified to the balance sheet and booked to the GL accounts specified, the following dialogue box appears:

Click on OK to complete the process of loan declassification.

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