How to categorize cash receive in refinance- bookkeeping

Question

I've got a commercial property we just refinanced, held in an LLC. Part of the result of the refinance was extra cash. My questions seems simple but it is just evading me. As I am entering the transaction in my bookkeeping software I can't figure out how to categorize the cash deposited back into my checking account, it sure doesn't seem like income to me... Thanks for your input.

Chase Busick · Answer

@Daniel Chang & @Jeff B. So which would be the correct option for a journal entry? & how would it be for each of the financial reports: P&L, BS & Statement of cash flows?

Basit Siddiqi · Answer

Increase in Cash

Increase in Loan Payable

Chris Byers · Answer

If you credit the Owner Distribution, won't this effect the owner come tax time?

Demetri T. · Answer

I knew I was making it overly complicated. It is always nice to just have someone spell it out for you... thanks.

Jeff B. · Answer

The above keeps the refi on the books.

Another approach for a Cash-out refi is

• DB checking account
• CR Owner Distribution

the refi is off the books and you can reinvest, go to Rome, do whatever ...

Daniel Chang · Answer

Journal entry:

DEBIT: Cash, old loan

CREDIT: New loan

In the Statement of Cash flow, this is going to be cash from financing activities, and not operating activities (operating activities comes from your actual business)

Ed Emmons · Answer

One side of the entry would be positive to bank account the other would be increasing the liability. In quick books it would be a journal entry. You may be able to enter it directly as the liability account in the deposit. I usually run a p/l report before making the entry to make sure the income doesn't go up because I seem to always enter it backwards when I try to reason it out. Does that work?

How to categorize cash receive in refinance- bookkeeping

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