How to setup an expense for an office supply bought on a payment plan?

Good day, matty5. I want to share some tips about setting up expenses for an office supply bought using a payment plan.

First, create a liability account with an opening balance equivalent to the total amount of the supplies. This allows QuickBooks to keep track of the in and out transactions to this account. I'll show you how:

1. Open the Accounting menu Chart of Accounts menu.
2. Click on the New drop-down.
3. Choose Liabilities from the top categories.
4. Select or Add an account under the Save account under field.
5. Fill out the Tax form section drop-down.
6. Enter the Account name.
7. Enter the Start date and opening balance.
8. Once done, click on Save.

Note: It's advisable for you to reach out to your accountant if you're unsure of what accounts to use. They'll help keep your books in order as well.

Next, issue a bill with the total amount of the purchase. Here's how:

1. Click the +New button and select Bill.
2. Select the vendor name.
3. Enter the bill details in the Category details section. From the Category dropdown, select the expense account you use to track expense transactions. Then enter a description.
4. Select the customer's name.
5. Add a second line for the taxes.
6. Pick the customer's name.
7. Enter the amounts.
8. Fill out all other necessary information then click on Save and close.

Finally, record your partial bill payments for 12 months until the plan is completely paid.

I'll also add this extra guide on how to reconcile your account in QuickBooks Online.

Keep in touch so we can help you further with banking or QuickBooks. Stay safe.

Thank you so much @Rainflurry and @Mich_S for your answers, it solved my question!

Hello Rainflurry,

I have reviewed the solution you’ve shared and it's correct and accurate. Thank you for sharing your inputs to help address the issue.

We love to see members supporting one another. Have a great day.

Question, (the instructions worked perfectly by the way)...

Why does the "Negative Number" created on the BILL for the Loan Liability Account cause a "Credit" (that is, an increase in the right side or the credit side of the T bar or journal entry? This is correct (Credit on the Liability and debit on the asset account), but I don't understand. A liability is INCREASED with a Credit and decreased with a debit. so why is the number input as a negative number? In my head, it seems like it should just be a positive number (I know that doesn't work, but I don't understand why). Again, this worked perfectly! I'm just not smart enough to understand the relationship between the negative number and the journal entry showing an increase in the Loan Balance. 

@Matthewscott67 

"Why does the "Negative Number" created on the BILL for the Loan Liability Account cause a "Credit" (that is, an increase in the right side or the credit side of the T bar or journal entry?"

A bill is designed to post the total amount of the bill as a credit to A/P.  You don't need to specify that when you enter a bill, you just enter the accounts and QB knows those are the debits to offset the A/P credit.  When you enter an amount as a negative on a bill, it reduces the A/P credit (because it's reducing the bill total) and credits whatever account you have selected on the negative line item.  The negative line item is substituted for the A/P credit.  

QB works the same way with invoices, except it enters the invoice total as an A/R debit.  Whatever accounts are listed as income accounts on the items will be debited when listed as a negative amount on an invoice. The negative line item is substituted for the A/R debit. 

Not sure if I explained that very well.