Converting Trade Payables to Financed Leases

eadysco · ‎December 31, 2020

I use bill.com to enter invoices that integrates with Quickbooks. For this company at certain times, outstanding trade payables are wrapped into leases. For example, I may have 50 invoices for 100,000 that are converted to a Lease to be paid off in 24 installments @ $4166 per month.

What is the best way to account for this in QBO? We do a periodic inventory so the payables are booked to COGS initially. The main goal would be to relieve the payables and expense easily and establish the lease payable.

Thanks!

Rustler · ‎January 01, 2021

Just because the bill is being changed to a financed lease, does not change the expense.

There are several ways to do this but to me this is the easiest

create a cash type bank account and pay all bills that are being financed

create the long term liability account for the lease
journal entry, debit the cash type bank account for the total, credit the long term lease liability account

set the newly created cash type bank account to inactive in the chart of accounts

View solution in original post

Rustler · ‎January 01, 2021

Just because the bill is being changed to a financed lease, does not change the expense.

There are several ways to do this but to me this is the easiest

create a cash type bank account and pay all bills that are being financed

create the long term liability account for the lease
journal entry, debit the cash type bank account for the total, credit the long term lease liability account

set the newly created cash type bank account to inactive in the chart of accounts

eadysco · ‎January 05, 2021

This did the trick - many thanks good sir!

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Converting Trade Payables to Financed Leases