Trying to Set up new auto loan

turleylisa · ‎November 29, 2021

I'm looking for some help setting up the proper accounts for my new auto loan.

I followed the help article "How do I record the loan for an asset" Which said you need to create a

long-term liability account which I did (don't know if I did it correctly)

Then I followed the info that said to create a journal entry showing the new liability account and

applying the loan amount to the asset under credit.

Then line two would be selecting the asset account under account and enter the same amount in

the debit column.

When I looked at my chart accounts it shows it as the amount in the long-term liability account and the

new one I created. Then it is also showing the amount in the fixed asset account I used.

I'm so confused and I don't know how to fix it. Obviously I don't know what I'm doing.

I need to know how to fix this so I can enter my payment to the correct expense account etc.

I have not made any payments yet, but I do have my down payment sitting in my bank feed because

I don't know what to do with it.

Any help is MUCH appreciated.

Thank you,

Lisa

Rustler · ‎November 30, 2021

Buying an asset is not an expense.

Create the following

a liability account

a fixed asset account for the asset and a fixed asset sub account name accumulated depreciation

an expense account called depreciation expense

do a journal entry

debit the fixed asset account and credit the liability account for the amount being borrowed.

If you made a down payment, enter the payment and use the fixed asset account as the expense (reason) for the payment

the accumulated depreciation and depreciation expense accounts are used at the end of the year. You get the number from the IRS pub 946 and do a journal entry

debit depreciation expense and credit the fixed asset accumulated depreciation account for the amount of the depreciation

View solution in original post

Rustler · ‎November 30, 2021

Buying an asset is not an expense.

Create the following

a liability account

a fixed asset account for the asset and a fixed asset sub account name accumulated depreciation

an expense account called depreciation expense

do a journal entry

debit the fixed asset account and credit the liability account for the amount being borrowed.

If you made a down payment, enter the payment and use the fixed asset account as the expense (reason) for the payment

the accumulated depreciation and depreciation expense accounts are used at the end of the year. You get the number from the IRS pub 946 and do a journal entry

debit depreciation expense and credit the fixed asset accumulated depreciation account for the amount of the depreciation

turleylisa · ‎December 01, 2021

Hi,

Sorry for the delayed response here. Thank you very much for your help.

I was able to get things in the proper places. Now i'm set and on track.

All the best,

Lisa

LMBUILDERSnj · ‎September 29, 2022

every loan needs to be this way ONLY if its an item of value you have the loan for? such as a car? but if its just a loan from a bank then its set up differently?

Adrian_A · ‎September 29, 2022

Hi LMBUILDERSnj,

The process of recording a loan, whether it's an item or a loan from a bank, is the same. I'm here to guide you through the steps.

Before doing any of the steps, I'd still suggest contacting your accountant for the best accounts to use.

As Rustler shared above, you'll have to create a liability account to record what you owe. Here's how:

From the Accounting tab, select Chart of accounts.
Click New.
From the Account Type dropdown, select Long Term Liabilities. If you plan to pay off the loan by the end of this fiscal year, select Other Current Liabilities instead.
On the Detail Type, select Notes Payable.
Give the account a name.
Click Save and Close.

Afterward, record the money you got from the loan. If you plan to put the loan money in your bank account, create a journal entry. If you want to use the money in a different way, I'd recommend reaching out to your account so they can guide you on the best way to handle the process.

Lastly, when you're ready to pay the loan, you can add a Check transaction. I've added this article for the detailed steps: Step 3: Record a loan repayment.

As always, you can visit our QuickBooks Community help website for more resources in managing your QuickBooks account.

Don't hesitate to get back to this thread if my assistance is in need.

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Trying to Set up new auto loan