adjusting journal entry in quickbooks online

@9130 3525 3968 4316 

Any AJEs that hits the balance sheet accounts (assets, liabilities, equity) that are dated in the past, will change your current balance sheet.  That is normal.  Your BS is a running total of all entries to those accounts from the day your business started.  They're not impacting your P&L because they are dated 2021 and you're running a 2023 YTD P&L which shows only entries posted to income or expense accounts dated 2023.  A P&L has a starting date and an ending date, so entries dated outside of those dates do not affect it.

Now another question has raised. 

I have two real estate properties:

I need to add them to the assets and liabilities & expenses.

Balance Sheet

The assets are the purchase price of the homes, correct? 

I put the two properties (homes) under fixed assets.

home 1 $225,500

home 2 $250,000

The liability is the $400k Line of credit used to purchase these homes, correct?

Income statement (p&l)

Now, I paid cash for the closing costs, down payment, and earnest money deposits $85,000 (just using round numbers) 

This is an expense, right?

home 1 $38,426.91

home 2 $46,417.41

Now, do I need to also include the remaining balance for the total cost of each home in the above expense?

home 1 $208,325.00

home 2 $191,675.00

These two amounts above, are also the same amounts for the Line of credit $400k So if I enter this as an expense will this overstate the liability on the balance sheet? 

Thank you. 

@9130 3525 3968 4316 

The liability is the $400k Line of credit used to purchase these homes, correct?  Yes.

Now, I paid cash for the closing costs, down payment, and earnest money deposits $85,000 (just using round numbers)   This is an expense, right?  No.  The only things that are an expense are the loan fees.  Everything else is put into the asset basis of the property.  When you depreciate the basis, that is the expense that hits your P&L.

So, to summarize, all of the costs for the properties with the exception of the loan fees are put into the fixed asset account of the property.  The journal entry would look something like this: