How do you record a loan payment for a fixed asset?

QuickBooks Help QuestionsHow do you record a loan payment for a fixed asset?
Anonymous asked 3 years ago

I watched your video about how to enter a purchase of a fixed asset on loan (link below), but how do you record the payments on the loan?
 

 

Recording a monthly loan payment is very simple. You will set up a liability on the books for the principal (borrowed money). Make a payment, use that account for principal and split for any interest and any other charges as expenses in the P&L.

Let’s take an example. You bought an equipment worth $10,000 for your business. Bank or finance company loaned you 100% so there was no down payment involved.

Write a Journal Entry (create + sign > other > journal entry) to setup fixed assets and loan liability on the books:

Debit > Equipment (as fixed assets) — $10,800
Credit > Loan from ABC Finance Company (as long term liabilities type if it’s longer than 12-month term) — $10,800

Write a monthly Journal Entry to depreciate equipment (over 36 months for example)
Debit > Depreciation Expense (expense on P&L) – $300
Credit > Accumulated Depreciation (as contra account to fixed assets) – $300

Make a monthly loan payment (write a check example > create + sign > vendors > check). Example: making $350 monthly payment includes $300 principal and $50 interest

Choose a payee = ABC Finance Company
Select a bank
Use Account under “Account details” section
Loan from ABC Finance Company for principal = $300
Interest Expense = $50

Get a statement from “ABC Finance Company” on a regular basis. Reconcile loan account. Whatever liability loan balance in QuickBooks does reconcile with the statement.

Note: Create new accounts as needed. In the case of down payment, use fixed assets account.
 

If you found our answers useful then please contribute few bucks to support this forum. Thank you!





Thank you!






Sign up QuickBooks for a 30-day FREE Trial

QuickBooks USA





QuickBooks Canada









BUY QuickBooks Online - Anytime, Anywhere. Easily Track Sales, Bills and Expenses.
Beach Vacation Rentals under $100 a night
Save on Smartphones from Verizon Wireless!
Over 4000+ STD Test Centers Nationwide. Order Testing Today!

Your Answer

13 + 15 =

Close
loading...