When working with loan transactions in TEA, you may find there are occasions when adjustment transactions are necessary. Generally, adjustments are not used in your day-to-day transaction posting process so when the time to use one occurs, you may not remember exactly how to post one to get the specific result you need.

Here are two common TEA adjustment transactions:

Small Loan Overpayment
In the case where a client has overpaid the loan for a very small amount you may decide to take the amount of the overpayment into interest revenue rather than refunding the client such a small amount.

In this example, the client’s final payment is $1.00 overpaid:

1. Post the final loan payment.
   A warning box will appear warning you that the payment will overpay the loan.
   
   
2. Click Continue.
   
   
3. In Transactions, click New.

   Date	Same day as the final loan payment
   Type	Adjustment

   
   
4. Click Allocate.
   
   
5. In the Adjustments box, click New.

   Item	Interest
   Type	Charged
   Amount	1.00

   
   
6. Click Save.
   
   
7. Click New.

   Item	Interest
   Type	Paid
   Amount	1.00

   
   
8. Click Save.
   
   
9. Click New.

   Item	Principal
   Type	Paid
   Amount	- 1.00

   
   
10. Click Close to close the Adjustments box.
    
    
11. Click Calculate, Post, Close.
    
    

After posting this adjustment transaction, if you look at the journal entry, you will note that this adjustment does not affect the cash account. Instead, it only affects loans receivable and interest revenue.

Loan Underpayment

In the case where a client has paid the loan in full except for a very small amount, you may decide to reduce the amount of interest revenue in order to pay the principal balance in full rather than ask the client for the small payment due.

In this example, the client’s final payment is $1.00 short:

1. Post the final loan payment.
   
   
2. Click Continue.
   
   
3. In Transactions, click New.

   Date	Same day as the final loan payment
   Type	Adjustment

   
   
4. Click Allocate.
   
   
5. In the Adjustments box, click New.

   Item	Interest
   Type	Charged
   Amount	-1.00

   
   
6. Click Save.
   
   
7. Click New.

   Item	Interest
   Type	Paid
   Amount	-1.00

   
   
8. Click Save.
   
   
9. Click New.

   Item	Principal
   Type	Paid
   Amount	1.00

   
   
10. Click Close to close the Adjustments box.
    
    
11. Click Calculate, Post, Close.
    
    

After posting this adjustment transaction, if you look at the journal entry, you will note that this adjustment does not affect the cash account.Instead, it removes $1.00 from interest revenue and applies $1.00 to loans receivable.

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