We sold 3 acres off a piece of real estate (fixed asset) that we had purchased on a long term liability for $25,000. $15,000 went directly to the original loan. $350 went to the law firm at closing. $9649 went into our banking account. We then wrote out a check for the $9649 plus closing costs to the bank on a new loan for a purchase of another piece of property. How do I record these? Just want to make sure I did them correctly.
Another question is: Since these are payments to the long term liability loan, they wouldn't show on the profit and loss report, would they?
To record the sale of a fixed asset, we need to record it through a Journal Entry. Then, we recommend consulting your accountant on how to debit and credit since you need to remove the real estate (asset) and the accumulated depreciation. Then, your accountant will assist you on how to record and distribute the three payments (15000, 350, 9649 plus cost). Here's how to create a Journal entry:
Go to the Company menu and select Make General Journal Entries.
Fill out the fields to create your journal entry. Make sure your debits equal your credits when you’re done.
Press Save or Save & Close.
For long term liability loan, QuickBooks records the payment for the principal amount as a deduction to the liability account. Once you complete all the payments, the value of the liability account will turn to zero. Then, QuickBooks records the interest payment as a company expense. Also, the long term liability loan will show on the Balance Sheet report. However, it would still depend on how the payments are affected and what accounts you debit and credit in QuickBooks. To learn more about tracking your loans, see the Manually track loans in QuickBooks Desktop article for more details.
Feel free to visit our Reports page for more insights about creating and managing reports.
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