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A vehicle was totaled, the insurance Company paid for it. it was entered in as a credit to the ins. company and now they have a credit...how do I correct this? QB online

The Insurance company paid for a vehicle that was totaled. It was paid in full already, so no payoff balance. the check was entered in as a credit to the ins company. So now the ins. company has a credit on their account. Which they should not have...how do I correct this in QB online?

Solved
Best answer 10-19-2018

Accepted Solutions
Established Community Backer ***

You should have the company vehicle on the books as a fix...

You should have the company vehicle on the books as a fixed asset and an associated fixed asset accumulated depreciation account too

Create an income account called gain/loss on asset, then do the journal entries

debit gain loss
credit fixed asset account for the amount in this account

debit accumulated depreciation - vehicle for the amount in this account
credit gain loss

deposit the ins check and use the gain/loss account as the source (from) account for the deposit


5 Comments
Established Community Backer ***

You should have the company vehicle on the books as a fix...

You should have the company vehicle on the books as a fixed asset and an associated fixed asset accumulated depreciation account too

Create an income account called gain/loss on asset, then do the journal entries

debit gain loss
credit fixed asset account for the amount in this account

debit accumulated depreciation - vehicle for the amount in this account
credit gain loss

deposit the ins check and use the gain/loss account as the source (from) account for the deposit


Experienced Member

Re: You should have the company vehicle on the books as a fix...

That is very helpful - thanks for the reply.  Question, if the insurance check is greater than the amount remaining on the asset, how is the additional income reported.  Do I credit the asset for the entire amount of the insurance check, or only up to the amount of remaining depreciation account? How do i record the other?

 

thanks again

Established Community Backer ***

Re: You should have the company vehicle on the books as a fix...

As I said, deposit the check and use the gain/loss account as the source (from) account for the deposit.

Experienced Member

I'm not sure I understand.

I have done what you said for the journal entries except that I did not make a journal entry to debit the accumulated depreciation because there was not a balance in that account. We just purchased this vehicle this year and so there is no depreciation as of yet. I deposited the insurance payout into the Gain/Loss account. The insurance also paid off the balance that was owed for this vehicle separately. I made another journal entry for this payoff and debited the Note payable and credited the Gain/loss account. Is this correct? Now my Gain/Loss account shows a debit of $14,000 for the fixed asset, a credit of $23,465.17 for the insurance payout, and a credit of $13,213.92 that they paid off the loan with. So the total on the Gain/loss account shows $22,679.09.

Established Member

Re: You should have the company vehicle on the books as a fix...

Easier way:

 

Liability account Enter money received  Debit $xx,xxx

Accumulated depreciation - amount for that vehicle only that has already been taken Credit $x,xxx

Asset Account for Vehicle (starting cost) credit $xx,xxx

Gain/loss on asset (income account) (if loss debit) if gain credit

 

EXAMPLE:

Ally - GMC Truck (liability)       $20,000

Accumulated Depreciation     $5,000

Gain/Loss on Asset (Loss)        $5,000  

GMC Truck (Asset)                                       $30,000

 

 

-OR- for Gain

 

Ally - GMC Truck (liability)       $30,000

Accumulated Depreciation     $5,000

Gain/Loss on Asset (Gain)                          $5,000  

GMC Truck (Asset)                                       $30,000