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arkvalleyinfo
December 11, 2018
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I am selling a company vehicle to an employee, but they will make loan payments. How do I set that up and receive payments?

  • December 11, 2018
  • 1 reply
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Step by Step 

Best answer by Malcolm Ziman

You have to make the Fixed Asset balance zero., and against that you create a Receivable.

Journal Entry:

Credit the full Original Cost of the vehicle that is in the books, to bring it to zero.

Debit the balance of accumulated depreciation for the vehicle, to bring it to zero.  (the difference is the Net Book value)

Debit a Loan Receivable account (current asset) with the amount you are selling the vehicle for.

Debit or credit the difference (sales price less NBV) to a P&L Other account "Gain/Loss on sale of Fixed Asset"

Monthly thereafter, when the employee pays, credit the Loan Receivable in the Bank Deposit form.

1 reply

M
Malcolm ZimanAnswer
December 11, 2018

You have to make the Fixed Asset balance zero., and against that you create a Receivable.

Journal Entry:

Credit the full Original Cost of the vehicle that is in the books, to bring it to zero.

Debit the balance of accumulated depreciation for the vehicle, to bring it to zero.  (the difference is the Net Book value)

Debit a Loan Receivable account (current asset) with the amount you are selling the vehicle for.

Debit or credit the difference (sales price less NBV) to a P&L Other account "Gain/Loss on sale of Fixed Asset"

Monthly thereafter, when the employee pays, credit the Loan Receivable in the Bank Deposit form.

R
RQ 12
March 10, 2020

How do you create the Loan receivable?

JasroV
JasroV
March 10, 2020

Hi there, @RQ11.

 

You'll want to create a loan account in your chart of accounts. Here's how.

 

In your QuickBooks Desktop (QBDT):

  1. Go to the Lists menu then Chart of Accounts.
  2. Select the Account button below and click New.
  3. Choose Other Account Types and select either Other Current Asset if the loan will be repaid this year or Other Asset if it won't be paid this year. 
  4. Click Continue.

Here's an article you can read for more details: Create, edit, or delete account in QuickBooks Desktop.

 

In case you need to create a journal entry in your QBDT, you can check this article for guidance: Create a journal entry in QuickBooks Desktop.

 

You can always get back to us if ever you need help. Helping you is our top priority. Take care!

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