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Setting up new vehicle purchase with a loan and downpayment

I am looking for help setting up in QB Pro 2015 a new van that we purchased. We did a down payment (2  checks actually) and financed the rest.  I am not a bookkeeper and get confused and the debit and credit answers. 

I went to set up a fixed asset account and the first part asked to categorize it as income or expense.  Not sure which to choose. 

Then I need to set up an account for the loan amount.  Should it be a loan account or a long term liability account?  And do i include the amount financed  or the total amount with the interest costs?   Where do i account for the deposit on the van? One was for $1000 and one was for $9000.  I posted them temporarily in the fixed asset area, but not sure if that is correct. (I can always change it) 

I have set up other loans but not sure that i have done it correctly. 

We dont do depreciation thru QB.  Our accountant and tax preparer does that when we do our taxes. 

since i don't really understand all the ins and outs of bookkeeping I would need to be walked thru it very simply.  but walked none the less.  sorry!!!

But any help would be greatly appreciated!!

Thank you!

Solved
Best answer 12-10-2018

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Established Community Backer ***

@ jmf ROFL - and here is my way to do it in the chart of...

@ jmf

ROFL - and here is my way to do it

in the chart of accounts create the following
fixed asset van
fixed asset sub account name accumulated depreciation van
long term liability account named van-loan

On the sale document you have several summary numbers
total sales price, amount financed

Since you wrote two checks we have to do part of this twice
enter the check for 1K and use the fixed asset van account as the expense for the check

use write checks again, on the expense tab
line 1 -  fixed asset van account, enter the total amount less 1K (the amount you already entered)
line 2 - select the long term liability account van, enter the total amount financed as a negative number

the check should now equal the 9K you paid, save

done

You need, need to enter the annual depreciation your tax guy calculates, or your P&L will not support your income tax return.  And keep in mind, stuff happens, his file for your taxes and those calculations can be corrupted, or any other number of things.  Your financial records, are just that yours, and an audit comes to you, not your accountant, assuming you have the same accountant years down the road when an audit happens

9 Comments
Established Community Backer ***

@ jmf ROFL - and here is my way to do it in the chart of...

@ jmf

ROFL - and here is my way to do it

in the chart of accounts create the following
fixed asset van
fixed asset sub account name accumulated depreciation van
long term liability account named van-loan

On the sale document you have several summary numbers
total sales price, amount financed

Since you wrote two checks we have to do part of this twice
enter the check for 1K and use the fixed asset van account as the expense for the check

use write checks again, on the expense tab
line 1 -  fixed asset van account, enter the total amount less 1K (the amount you already entered)
line 2 - select the long term liability account van, enter the total amount financed as a negative number

the check should now equal the 9K you paid, save

done

You need, need to enter the annual depreciation your tax guy calculates, or your P&L will not support your income tax return.  And keep in mind, stuff happens, his file for your taxes and those calculations can be corrupted, or any other number of things.  Your financial records, are just that yours, and an audit comes to you, not your accountant, assuming you have the same accountant years down the road when an audit happens

Established Community Backer ***

Even if you calculate your own depreciation quick books l...

Even if you calculate your own depreciation quick books lacks the capability unless I am missing something huge to show in a tabulated format all of the depreciation taken and when and which type as well as how much is left over. This is partly due to depreciation calculations are off books and only added once determined.
Established Community Backer ***

I did not say QBDT or QBO calculates depreciation what I...

I did not say QBDT or QBO calculates depreciation
what I said was that the data needs to be in the company data file
depreciation always calculated outside QB and is a journal entry in both QBDT and QBO, debit deprec expense, credit accum deprec

If you have the cost basis in one FA account, and the accumulated depreciation in a sub account, per item being depreciated - the book value is right there.

Whether that information is presented as a table in a report, is just someone's preference on reporting

If accumulated depreciation for ALL fixed assets is being posted ONE account - that is also a choice - I think that choice is wrong - but that is an opinion and not a rule.
Established Community Backer ***

"the first part asked to categorize it as income or expen...

"the first part asked to categorize it as income or expense. Not sure which to choose." It is either or as far as sections on the create account page. Skip to lower part select Fixed Asset. Describe but DO NOT enter a beginning balance. Same with the Van Loan liability, create the account. Select Loan and in next screen change the dropdown to Long Term Liability, Now make a journal entry First line debit purchase price to the asset account Lines 2+ sales tax, doc fees, title, etc debit post to asset account. Down payments post credit to asset, they will reverse in the actual checks Lat line credit the Loan face amount At this point everything should balance. Save and go to your checks, make sure each posts to the asset. Interest is only posted in the monthly payment checks - or once a year recap.
Established Community Backer ***

Yes there's a few steps in this: From Lists: Cart of Acco...

Yes there's a few steps in this:

From Lists: Cart of Accounts, add 2 new accounts - 1 fixed asset type for the vehicle, 1 long term liability for the loan.

From the Vendor Center setup  2 new vendors: for the car seller, and the finance company.

Create a Bill from the car dealer for the full price of the car with all associated costs, and apply sales tax codes to get the total due - you should have a complete invoice from the dealer.  Code the costs to the new fixed asset account.

Delete the 'deposit' cheques and reenter them as 'bill payments' to the car dealer applied to the purchase bill.

Create a vendor credit memo to the finance company for the amount remaining open on the car purchase bill.  This is the amount you have borrowed.  Code this to the new loan liability account.

Now enter the offset: "pay" the bill to the car dealer, then 'receive a refund' from the finance company - same amounts.  Use an inactive bank account if you have one.

Monthly loan payments to the finance co then need to be split between principle & interest.  If they have given you a schedule of those amounts then use that.  If not, you can estimate that the principle is being paid evenly over the number of payments - and the remainder of the monthly payment is expensed as interest. The principle portion is charged to the new loan liability account.  The interest is an expense.


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Re: Yes there's a few steps in this: From Lists: Cart of Acco...

How do you :

 

Delete the 'deposit' cheques and reenter them as 'bill payments' to the car dealer applied to the purchase bill.

Create a vendor credit memo to the finance company for the amount remaining open on the car purchase bill. 

 

We purchased a new vehicle and I am stuck how to delete the 'deposit'

QuickBooks Team

Re: Yes there's a few steps in this: From Lists: Cart of Acco...

Hello there, @rae2586.

 

Let's go to the bank register to delete the deposit from there.

 

But before we proceed, I suggest seeking help from your accountant if doing this won't affect your books.

 

To start with, you can follow these steps on how to delete deposit:

 

  1. Go to Banking.
  2. Select Use Register.
  3. Choose the Bank Account, then click OK.
  4. Find and select the deposit transaction.
  5. In the toolbar, click Edit.
  6. Hit Delete Deposit.
  7. Click OK to confirm.

Once deleted, you can re-enter them as bill payments and create a vendor credit. But please make sure that you've entered it correctly. 

 

Here's how you can do it:

 

  1. Click on the Vendors menu.
  2. Select on entering Bills.
  3. Click on Credit.
  4. Fill in the necessary information.
  5. Click Save and close.

Once done recording/creating the vendor credit and the vendor bill correctly, you can now open the bill and pay it.

 

  1. Open the Bill.
  2. Click on Pay Bill.
  3. To apply for the vendor credit, click on Set Credits under the Number of Credits section.
  4. Click/select the vendor credit under Discount and Credits.
  5. Click Done.
  6. Click on Pay Selected Bills.

For your reference about paying bills and setting credits on QuickBooks Desktop (QBDT), you may check this article: Pay bills in QuickBooks Desktop.

 

In case you need tips and related articles in the future, visit our QuickBooks Community help website for reference: QBDT Self-help.

 

Please feel free to add a post/comment below if you have any other questions. I'll be always here to help you. Have a great day ahead!

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