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First, I feel it is very frustrating that nowhere on the internet explains how to enter a car lease in Quick book ...and I mean a step by step instruction

First, I feel it is very frustrating that nowhere on the internet explains how to enter a car lease in Quick book ...and I mean a step by step instruction. I am in Ontario Canada.

I have a car lease from Honda. The lease is for 3.5 years at which time I can walk away from the lease or buy it out.  After an exhausting search...I think this is an operating lease.  Is it?

Could someone please let me know what I need to enter in the chart of accounts.

I do not pay expense directly out of my business account. I pay them from my personal account and make a General Ledger adjustment at the end of each month.

I am guessing that I could create an Expense account (need instruction what I do when I hit continue). and the create a Vehicle lease account as a sub account(again what do I put when I click continue)

Then I can just write a cheques payable to the Honda company and put that towards the Vehicle lease with the HST.

Please help as there is no help anywhere online and I'm not reinventing the wheel here.

Thank you

Mike


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Re: First, I feel it is very frustrating that nowhere on the internet explains how to enter a car lease in Quick book ...and I mean a step by step instruction


@MikeC21 wrote:

.

I have a car lease from Honda. The lease is for 3.5 years at which time I can walk away from the lease or buy it out.  After an exhausting search...I think this is an operating lease.  Is it?

 

Yes this is an operating lease.

 

 

Could someone please let me know what I need to enter in the chart of accounts.

 

An operating lease is not listed on the balance sheet, though it might be in a footnote to your financial documents.

 

Payments for an operating lease are basically rent, it is an operating expense.

 

from this page
https://corporatefinanceinstitute.com/resources/knowledge/accounting/capital-lease-vs-operating-leas...

Accounting for an operating lease is relatively straightforward. Lease payments are considered operating expenses and are expensed on the income statement. The firm does not own the asset and, therefore, it does not show up on the balance sheet and the firm does not charge any depreciation.

 

So in the chart of accounts, create an expense account named something like, lease payment expense, Honda lease expense, etc.  Use that expense account when you enter a payment.

 

I do not pay expense directly out of my business account. I pay them from my personal account and make a General Ledger adjustment at the end of each month.

 

 That will work, though you do not say what the journal entry is.  Assuming you are a sole trader

debit expense
credit owner equity investment

 

I prefer to use a clearing type bank account for this though.  Create a cash type bank account called clearing, for each payment

enter a deposit in the amount and use owner equity investment as the source account for the deposit

then "pay the lease" from the clearing bank account.

 

Journal entries should be the exception when using QB, they often do not work as you think they should, and  when you use inventory type items they never work for inventory. It is much better to use the forms on the home page the way QB is designed to be used.    Journal entries also bypass accrual/cash reporting, and will not show on many reports.