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Join nowI 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
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.
Hello!
Thanks for the valuable information.
How would you record the transaction when you only purchased a client list (40 year old print shop).
There was old printers leftover that have been paid off and has no value but still operates.
There was also paper inventory and toner that was left behind that has approx. $4k value.
Bottom line is our purchase agreement didn't specify any value to the equipment.
How would I record this transaction? Any information is appreciated.
Hello there, @reprographics.
In QuickBooks, when you purchase a business you should have received a balance sheet showing the book. In the meantime, you can follow the steps provided by Rustler above.
However, if you need to offset your adjustment, I'd recommend reaching out to your accountant first. This way, your accountant can decide which accounts to use to properly record the transaction.
Don't hesitate to drop your comment below if you have any other questions.
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