cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Level 1

How do I account for building improvement construction loan?

I have a client that has purchased a building, they will be making some improvements on the building.  I am unsure how to correctly record the construction draws during the remodel phase.  My thought is to add a fixed asset account for the Construction draws and then offset that when the building is done to the fixed asset building account.  If that is correct how do I account for the loan on the liability side?

Solved
Best answer 3 weeks ago

Best Answers
Highlighted
QuickBooks Team

How do I account for building improvement construction loan?

Hi there, MakingCentsBookkeeping. Thanks for reaching out to the Community.
 

You can set up a liability account to record a loan and its payments. This will also track what's owed.
 

Here's how:
1. Use your Gear (⚙️) icon and choose Chart of Accounts.
2. Click New.
3. In the Account Type ▼ drop-down, pick Long Term Liabilities or Other Current Liabilities.
4. From your Detail Type ▼ menu, hit Notes Payable.
5. Give the account a relevant name.
6. Specify when your client wants to start tracking their money using the ▼ drop-down menu.

  • Choose Today if the account you're tracking is new as of today. In your Account Balance field, enter its current balance.
  • Pick Other if this account was started on another date. In your Select a date field, input the date you want to initiate tracking. Use your Account Balance field to specify the balance.

7. Enter the full loan amount as a negative number.
8. Select Save and close.
 

Once your liability account is configured properly, you can proceed with recording the money and repayments.
 

I've included a couple resources about working with loans that may come in handy moving forward:

 

Please feel more than welcome in posting a reply if there's any other questions. Have a wonderful day!

View solution in original post

1 Comment
Highlighted
QuickBooks Team

How do I account for building improvement construction loan?

Hi there, MakingCentsBookkeeping. Thanks for reaching out to the Community.
 

You can set up a liability account to record a loan and its payments. This will also track what's owed.
 

Here's how:
1. Use your Gear (⚙️) icon and choose Chart of Accounts.
2. Click New.
3. In the Account Type ▼ drop-down, pick Long Term Liabilities or Other Current Liabilities.
4. From your Detail Type ▼ menu, hit Notes Payable.
5. Give the account a relevant name.
6. Specify when your client wants to start tracking their money using the ▼ drop-down menu.

  • Choose Today if the account you're tracking is new as of today. In your Account Balance field, enter its current balance.
  • Pick Other if this account was started on another date. In your Select a date field, input the date you want to initiate tracking. Use your Account Balance field to specify the balance.

7. Enter the full loan amount as a negative number.
8. Select Save and close.
 

Once your liability account is configured properly, you can proceed with recording the money and repayments.
 

I've included a couple resources about working with loans that may come in handy moving forward:

 

Please feel more than welcome in posting a reply if there's any other questions. Have a wonderful day!

View solution in original post

Need to get in touch?

Contact us