It's normal for other businesses to make a loan for new asset purchases, @SudhaT. With that, I'll walk you through recording the transactions to track them in QuickBooks Online (QBO) accurately.
To begin, we can create a liability account to track what we owe. Then, set up an asset account to record the machinery purchase.
You can create a liability account by following the steps below:
- Go to the Transactions menu and select Chart of Accounts (COA).
- Click the New button to create new accounts.
- Enter an Account Name. For example: Machinery Purchase.
- Choose Other Current Liabilities if to be paid in full within one year. Select Long Term Liabilities if to be repaid in more than one year.
- Leave the Opening balance blank, and add a description to add extra information about the account.
- Lastly, click Save.
Given that you have already created your liability and asset account, let's proceed with creating a Journal Entry using the steps below:
- Click the + New icon and select Journal entry.
- For the first line under ACCOUNT, choose your new liability account, and enter the $40,000 loan amount under CREDITS.
- In the next line, select the appropriate asset account under ACCOUNT. Please know that QuickBooks will auto-populate the DEBITS column based on the amounts in the CREDITS column.
- Then, click Save or Save and close.
After this, let's create an expense transaction with the seller posted to the bank account where you get the money from purchasing the asset. Thus, you can select the seller under the Payee dropdown and the releasing bank under the Payment account.
For the Category details, please select the asset account under the Category column and enter the $40,000 under the Amount section.
Once done, create a deposit of $10,000 for the delivery cost returned by the seller. You can post the amount to where the actual money has been deposited.
Record the loan repayment by going over to this article and navigating to Step 3: Record a loan repayment: Set up a loan in QuickBooks Online. You can also consult your accountant to guide you with choosing the correct accounts or other ways to record the transaction.
You can reply to this post if you have additional queries about handling financial transactions in QuickBooks. I'm always available to lend a hand for help. Stay safe!
