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Donna221
Level 1

How to enter information for a new company vehicle

Hi, Can someone please tell me how to enter information into QuickBooks for a new company vehicle? I was advised to:  Put the loan on the books, Debit the auto, credit the loan but I am not sure how to do this.

Thanks

10 Comments 10
jamespaul
Moderator

How to enter information for a new company vehicle

Hello, Donna. 

 

Congratulations on getting a new vehicle for your business! I'm here to help you record and enter the vehicle loan in QuickBooks. 

 

First, you would want to set up things needed to record the loan for your new company vehicle: a liability account; an expense account (for interests, charges or fees); a vendor (where you would pay for the loan); and an asset account. 

 

Here's how to set up a liability account: 

 

  1. Go to the Lists menu, then select Chart of Accounts.
  2. Right-click anywhere, then select New.
  3. Select the account type for your non-cash loan:
    • Fixed Asset: Use this for items that have useful value for more than a year (vehicles, buildings, and so on)
    • Other Current Asset: Use this for items with value that can be converted to cash (like prepaid expenses)
    • Other Asset: Use this for items that are neither Fixed Assets nor Other Current Assets.
  4. Click Continue.
  5. Enter the name and number for the account.
  6. When you’re done, select Save & Close.

 

Next, set up the expense account by going to the Chart of Accounts page again (set the radio button to Expense for the category). You can name it like "loan interest and fees" or similar. 

 

Then, create a vendor where you would record your payments to:

 

  1. Go to the Vendors menu, then select Vendor Center.
  2. Click the New Vendor button.
  3. Enter the name of the bank or the company.
  4. Hit OK.

 

Before recording a journal entry, set up an asset account for the vehicle: 

 

  1. Go to your Chart of Accounts again, then create a new account.
  2. Select the appropriate asset type for the vehicle loan: 
    • Fixed Asset: Use this for items that have useful value for more than a year (vehicles, buildings, and so on)
    • Other Current Asset: Use this for items with value that can be converted to cash (like prepaid expenses)
    • Other Asset: Use this for items that are neither Fixed Assets nor Other Current Assets.
  3. Hit Continue.
  4. Enter the name of the asset account, then click Save & Close.

 

Finally, record the vehicle loan through a journal entry:

 

  1. Go to the Company menu, then select Make General Journal Entries.
  2. Enter the Date and journal Entry No.
  3. Choose the first line and debit the loan asset account.
  4. Select the second line and credit the liability account.
  5. Click Save & Close.

 

If you'd like some reference regarding these steps, you can read more details from this article: Manually track loans in QuickBooks Desktop (it also has the steps to help you record the loan payments).

 

Though, you also have the opportunity to reach out to an accountant before and while doing this. They'll ensure your books are accurate, and that the vehicle loan is properly managed within QuickBooks. 

 

Need to close your books for the current period and reconcile your bank accounts? Check out this article if you need a guide: Reconcile an account in QuickBooks Desktop.

 

If you need to record other loans or if you need to complete a specific task in QuickBooks, please let me know the details. I'll be on the case and work with you. 

Donna221
Level 1

How to enter information for a new company vehicle

Thank you this was very helpful!

Mary with WestCoast
Level 1

How to enter information for a new company vehicle

We are financing $57,000 for our new vehicle. It will cost us 19,000 in finance charges (interest) for a total of 76,000 we will have to pay in total. What amount do we put under fixed asset on the journal entry - the amount including interest or without?

 

Furthermore, Do we record the total amount of interest we will be paying on the entry and break it down on each payment?

 

Thank you

 

 

Rainflurry
Level 12

How to enter information for a new company vehicle

@Mary with WestCoast 

 

You do not include interest in the fixed asset's value.  The journal entry for this is as follows:

 

 DebitCredit
Vehicle (fixed asset @ original cost including sales tax, etc)XXX 
   Loan Payable (amount financed) XXX
   Bank Account (difference for any down payment) XXX

 

When you make payments, assign the principal portion of the payment to the Loan Payable liability account and the interest portion to your interest expense account.  The $19K in total finance charges should not be accounted for anywhere because you have not incurred that expense yet.  You will progressively incur it as you make each payment, with the final payment (assuming you don't sell the vehicle or pay it off prior the end of the loan term) bringing the total interest expense to $19K.

DealingWithDigits
Level 2

How to enter information for a new company vehicle

Thank you! That was very helpful.

rboice60
Level 1

How to enter information for a new company vehicle

My client traded a vehicle in to purchase a new vehicle.  He still owed $28,477.05 on his trade-in, which was paid off and still had a net equity of $13,522.95 to put down on the new vehicle.

Can you show me how I would record this transaction on my JE?

SEL Construction2
Level 1

How to enter information for a new company vehicle

Hi, I am doing the same, why do we need to do a journal entry. Wouldnt I just create the fixed asset and then create the liability account and then record the payments we make against the liability account? 

 

SEL Construction2
Level 1

How to enter information for a new company vehicle

Hi, Why the journal entry? Wouldn't I be entering this at fixed asset and liability account creation?

ArielI
QuickBooks Team

How to enter information for a new company vehicle

Hello, @SEL Construction2.

 

Before anything else, know we appreciate you taking the time to post here in the Community space. 

 

When entering information for a new company vehicle in QuickBooks Desktop, a journal entry is often used to record the transaction. This method allows for accurate tracking of the vehicle as an asset and facilitates the recording of depreciation.

 

Moreover, I agree that creating the fixed asset would be a great solution. We'll gladly input the steps below to get you going:

 

  1. Access your QuickBooks Desktop Company.
  2. Go to the Lists menu.
  3. Choose Fixed Asset Item List.
  4. Enter the necessary details.
  5. Once done, click the OK button.

 

Please see this page for more information: Use Fixed Asset Manager in QuickBooks Desktop.

 

If you're unsure of what asset account to use for the truck, you can reach out to your accountant. This way, they can guide you and ensure you're tracked accurately inside the program. In case you don't have an accountant, you can visit this page to get one: Find a QuickBooks ProAdvisor.

 

Moreover, if you wish to run a report and add more details to it, feel free to visit these articles:

 

 

You can comment below if you have any additional QuickBooks-related concerns or need further assistance managing assets inside the program. Have a good one.

Rainflurry
Level 12

How to enter information for a new company vehicle

@SEL Construction2 

 

"Wouldnt I just create the fixed asset and then create the liability account and then record the payments we make against the liability account?"

 

Sure, but how are you going to enter the cost of the fixed asset and a corresponding and offsetting amount to your loan liability?  There are many ways to enter a fixed asset.  A journal entry is just one way and is the cleanest IMO.  You can enter a fixed asset and enter an opening balance but that offsets the fixed asset cost to Opening Balance Equity (OBE) which is not correct.  You need the offset to be the loan liability.  You can move OBE with a Transfer to your loan liability but now we're getting in the weeds.  Or, you can create a $0 bill with the fixed asset cost as a positive amount and the loan as a negative amount (that does the exact same thing as a journal entry).  The bottom line is that you need to offset the cost of the fixed asset to the loan liability account.  You can get there a few ways but IMO a journal entry is the easiest way to do it with one entry.  

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