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123Debris
Level 1

Proper entry for large purchase with an investor and finance company

We recently purchased a big piece of equipment. The transaction is pretty complicated and I am not sure of the best way to enter it into my books. It goes like this:

  1. 1. We bought the truck from an equipment company. We were invoiced for $128 (and some change). 
  2. 2. Someone invested a large sum (cash) as a loan to be paid back over 60 months. They personally wired the 10% deposit, so it never flowed through our account. We deposited the remainder of the cash (some investor/some ours) and wired to equipment company.
  3. 3. We financed the rest with a bank not affiliated with the equipment company. 60 payments.

My questions are these:

  • a. Do I set the equipment company up as a vendor and enter the total invoice amount? If so, How do I log the 10% that was paid by someone else but our responsibility? 
  • b. How do I link the bank financing as paying the invoice from the equipment company?

I am probably making this more complicated than it needs to be. HELP!

Solved
Best answer January 29, 2019

Best Answers
Rustler
Level 15

Proper entry for large purchase with an investor and finance company

@123Debris

 

Create a fixed asset account for the truck
Create a long term liability account for the loans (from your description there are two loans = two liability accounts, investor and bank)
Create the truck sales company as a vendor

Create a bill for the vendor, select the fixed asset truck account and the total amount
next line select the loan liability associated with the investor, enter the amount of the 10% deposit as a negative number
save

Enter the deposits in your bank account, you say some yours some the loan, so you will have to split up the detail on the deposit, one line is the investor liability account and amount, the other line is where the rest of the money came from and the amount

Enter a vendor credit, select the bank loan liability account and enter the amount of the loan, save
Bring up pay bills, apply the vendor credit, then select the bank account as the payment source, make the balance due payment.

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1 Comment 1
Rustler
Level 15

Proper entry for large purchase with an investor and finance company

@123Debris

 

Create a fixed asset account for the truck
Create a long term liability account for the loans (from your description there are two loans = two liability accounts, investor and bank)
Create the truck sales company as a vendor

Create a bill for the vendor, select the fixed asset truck account and the total amount
next line select the loan liability associated with the investor, enter the amount of the 10% deposit as a negative number
save

Enter the deposits in your bank account, you say some yours some the loan, so you will have to split up the detail on the deposit, one line is the investor liability account and amount, the other line is where the rest of the money came from and the amount

Enter a vendor credit, select the bank loan liability account and enter the amount of the loan, save
Bring up pay bills, apply the vendor credit, then select the bank account as the payment source, make the balance due payment.

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