Loan Proceeds Not Deposited To Bank
How do I record an asset paid for in installments and financed by a lender?
New to Quickbooks and double entry accounting. I understand most of the program, but have a question re journal entries.
We commissioned a boat to be built for our business. The initial down-payment and all subsequent payments were paid directly from our financier to the builder. I assume I am to make journal entries for the amounts disbursed. How exactly do I enter these ... on the first line of the JE would I show a credit to the financier account (less GST), under memo that it is a down-payment, under name ???. On the second line would I show a debit to the fixed asset account, same memo, under name the boat builder?.
What about the GST? How do I enter that? I have a GST/HST account, a Receiver General account, but the GST was paid by the financier and becomes part of our long-term liability.
Any help would be appreciated.
Hi Andrea,Click here to find the journal entry you need
. The part of the article I am directing you to deals with both loan proceeds deposited to your bank account AND loan proceeds paid directly to the vendor.
You will deal with GST paid when you record the asset, in this case your boat by debiting GST payable.To get the most out of QuickBooks, it is best to use the appropriate module whenever possible
... see The Bookkeeper's QuickBooks® Tip
in my adjusting entries article.
As you are new to QuickBooks and double entry accounting, I would record the invoice in the account payable module ("Enter Bills") ... that gets your GST recorded properly.
Then I would use "Pay Bills" every time the financier made a payment ... running it through the cash account ... so you can see the cash coming into the business.
Then I would use "Make Deposit" (which debits cash account) and credits your bank loan account.
When everything is done, your asset should show up under long term assets, GST payable should have a debit entry, your cash entries should total zero, and your bank loan should reflect the amount you borrowed.
Some of the links I've referred you to now require a FREE Insider's Pass which you can obtain here
If you find debits and credits confusing, you might want to keep my cheat sheet
open while doing your books.P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.