As far as I know the lots a developer holds for sale are considered inventory, not an asset. I received a closing statement for sales of 4 lots. Let's use a assumption case here to illustrate. On the seller side, it shows
credit of $720,000 sale price,
debit $ 528.62 for county property tax,
debit $225 for closing attorney fee,
debit $ 1,440.00 for excise tax,
and debit $612,000.00 for the release fees to the bank which issued the development loan.
How do I enter this transaction in QuickBooks? It seems using the Customer section may be more complicated than using a Journal Entry approach, right? If someone can provide some details on the best practice that would be wonderful.
Hello there, Nick.
I appreciate you providing on-point details and a screenshot for me to get a better picture of your concern.
Depending on how your business treats your lot for sale, you can track it as an inventory item if you use it for merchandise or parts you purchase, and then resell. You can categorize it as an asset account since land is a type of a fixed asset.
A company's fixed assets are reported in the long-term asset (described as the Property, Plant and Equipment) section of your Balance Sheet report. Since land does not get depreciated, there is no depreciation expense to be recorded up to the date of the sale, nor is there any accumulated depreciation to be removed from the books of the company. You can also check out this IRS article for more details about the basis of assets.
The Customer Center is where you find information about all of your customers and jobs and their associated transactions in one place. The simplest way to record your parcel/lot sale is to write an invoice if you track it as an inventory item. Here's how:
Also, I've checked on your sample screenshot that there are taxes associated with the sale, I'd suggest consulting your accountant. You can check with him/her to verify if the appropriate method in recording a lot for sale is by using the Customer Center or by a journal entry. This is to ensure your books and filing of tax returns will be accurate.
I'm also including this useful article to learn more about the features in using the Mac version: User's Guide.
The information above will help you make better business decisions while using QuickBooks, Nick.
I'll be around to help if there's anything else you need. Have a great day.