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Level 2

Long Term Liability

I have set up a long term liability account with a starting balance of $175,000. for purchase of ground. However, when we had our closing with the bank we paid $75,000. down payment. Where and how do I post the entry for the $75k down? The total ground price was $250,000. So I set the long term liability up with a balance owed of $175k. 

Do I need to link this long term account with another asset account?

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Best answer 02-27-2019

Accepted Solutions
Level 7

Re: Long Term Liability

If the land cost $250K than you have an asset equal to $250K.  The initial liability should also be $250K.  When the check for $75K down was paid, you reduce the liability leaving the liability balance at $175K.

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1 Comment
Level 7

Re: Long Term Liability

If the land cost $250K than you have an asset equal to $250K.  The initial liability should also be $250K.  When the check for $75K down was paid, you reduce the liability leaving the liability balance at $175K.

View solution in original post

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