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taftsquare
December 12, 2021
Question

Purchasing Fixed Assets with a loan through bill pay

  • December 12, 2021
  • 2 replies
  • 25 views

We have purchased a business and part of the purchase agreement is that we purchased $50,000 worth of equipment from the previous owners via a loan with quarterly payments. I am running into an issue in getting the transaction to show correctly under the fixed assets. Here is what I had done so far:

 

1) Added a Long Term Liability account in the Chart of Accounts for the Loan

2) Entered all of the loan payments in bill pay with the principal portion of the loan payments being applied against the Long Term Liability Account and set up as a AP.

3) Set up the Interest Portion of the Payment to be expensed as Interest Expense

 

The problem I am running into is since this is the purchase of a fixed asset, I am not seeing how I can Debit the Fixed Asset accounts now that the Bill Payments have been set. Please see screenshots attached

 

 

2 replies

Charies_M
Level 9
December 13, 2021

I'm glad you made your way here, taftsquare.

 

I appreciate the detailed information about your concern and I'm here to help debit the fixed asset accounts in QuickBooks Online (QBO).

 

You can create a Journal Entry (JE) to record the Asset. Before doing so, I suggest consulting an accounting professional to provide more expert advice on how to handle this situation.

 

Here's how to create JE:

  1. Go to the +New button.
  2. Under Other, select Journal entry.
  3. Set the Asset's purchase date as the Date of the entry. 
  4. On the first line select the Asset account then record the item and enter the purchased value as a Debit. 
  5. For the second line, use the same amount.
    • If the Asset's purchase needs to be recorded in your Bank Registers for historical reconciliations or any other reason, Credit the Bank Account.
    • If the Asset's purchase won't be listed in your books, Credit the Opening Balance Equity account, representing an Asset that was brought into the company on the book's starting date.
  6. Click Save and close. 

For additional information on this, I recommend checking the following article about creating Journal Entry: Create a journal entry in QuickBooks Online 

 

In case you want to review the entries made, you can pull up or print a report for Journal Entries.

 

To do that:

  1. Go to the Search icon then choose Advanced Search.
  2. Filter your search to Journal Entries. Add additional filters such as Reference no., as necessary.
  3. Select Search, then choose the desired Journal Entry.
  4. Select More, then choose Transaction journal.
  5. To print, select the Print icon in the upper right of the report.

Of course, you're always welcome to visit us again if you need help. It will be my pleasure. Stay safe and have a great day ahead!

Charies_M
Level 9
December 14, 2021

Hi, taftsquare.

 

Hope you’re doing great. I wanted to see how everything is going about purchasing fixed assets with a loan. Was it resolved? Do you need any additional help or clarification? If you do, just let me know. I’d be happy to help you at any time.


Looking forward to your reply. Have a pleasant day ahead!

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