How to Record Loan Escrow Account Funding
Records the transfer of cash into a lender-controlled escrow account for the payment of property taxes and insurance.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Restricted Cash - Escrow Account | Asset | 10,000.00 | - |
| Cash | Asset | - | 10,000.00 |
💡 Accountant's Note
Funds held in escrow are still assets of the company but are restricted in use; this entry moves liquidity to a restricted category.
Practitioner & Systems Framework
💻 ERP Architecture
Set up a separate bank account record in the GL to facilitate monthly reconciliation of the lender's escrow statement.
⚠️ Audit Flags
Directly expensing escrow payments instead of capitalizing them as restricted cash until the bank pays the third party.
📄 Required Documentation
Monthly mortgage statement showing the escrow portion of the payment.
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