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Level 2

How do I record two sale of investments, one written off and the other sold with a profit?

Let's say I have two investments in my balance sheet. At the start of the year, Investment A was worth £100 and Investment B worth £200.  Both are recorded separately on the Balance Sheet as Tangible Assets.

 

Investment A has gone wrong and needs to be written off.  It is now worth zero.  What Journal Entry should I create to write this off in the balance sheet and also to add it as a loss to my P&L.

 

Investment B I have closed and with the gain, transferred say £250 to the company bank current account.  How do I journal this one so that the asset is no longer in the Balance Sheet, but my P&L shows the £50 gain?

 

The journal entries I've tried to create zero the assets' values in the Balance Sheet, but is adding the full £250 for Investment B into the P&L, rather than just the £50 gain. 

Thanks in advance.

Solved
Best answer November 27, 2020

Accepted Solutions
QuickBooks Team

How do I record two sale of investments, one written off and the other sold with a profit?

Hi Cordelia To account for the loss of Investment A you could create a journal entry that credits the asset account and debits an expense account, you can create a specific expense account for this loss, lets say name it 'Investment A write off'. This will remove the amount from the balance sheet and show as an expense/loss on your P&L.

To account for sale/closure of Investment B including the profit you could create a journal entry that credits the asset account, in your example, by 200, debit the bank account by 250 and then credit 50 to an income account, again you can create a specific income account and name it, lets say 'profit of investment B'. This will remove the 200 from the balance sheet, show 250 in your bank account and 50 on your P&L.

Please note that we're not accountants and any advise we give should be qualifies by an accountant.

View solution in original post

1 REPLY 1
QuickBooks Team

How do I record two sale of investments, one written off and the other sold with a profit?

Hi Cordelia To account for the loss of Investment A you could create a journal entry that credits the asset account and debits an expense account, you can create a specific expense account for this loss, lets say name it 'Investment A write off'. This will remove the amount from the balance sheet and show as an expense/loss on your P&L.

To account for sale/closure of Investment B including the profit you could create a journal entry that credits the asset account, in your example, by 200, debit the bank account by 250 and then credit 50 to an income account, again you can create a specific income account and name it, lets say 'profit of investment B'. This will remove the 200 from the balance sheet, show 250 in your bank account and 50 on your P&L.

Please note that we're not accountants and any advise we give should be qualifies by an accountant.

View solution in original post