I purchased a business last year for 150k. Put down 50k and making payments on the remaining 100k. There are some inventory and assets that came with the purchase, say 40k worth. How should I record the purchase and payment? Thanks
Re: How to record a purchase of an existing business?
When you purchased the business you should have received a balance sheet showing the book value of all assets you purchased (fixed and each inventory item with qty/value). That book value is the starting balance for each one.
create bank account for the business with the starting balance = to your funds plus the 50K create a cash type bank account
enter the down payment of 50K and use the cash type bank account as the expense (reason) for the payment
create a loan liability account and then make a deposit to the cash type account, 100K and use that loan liability account as the source account for the deposit
create a vendor named inhouse
create your fixed assets in the chart of accounts Using the cash account "buy" each fixed asset for the book value
create the inventory items, zero on hand, zero cost
using the cash account, "buy" each inventory item in the qty you have, for the total value of that qty
If there is an amount left over after all assets have been "bought", create an asset account called good will and enter a payment on the cash account for the balance in the cash account, and use the goodwill account as the expense for the payment.