how to add car loan with down payment (expense) and record it as fixed asset? example: car cost 5000, down payment 1000, loan amount: 4000, monthly instalment: 400 (inclusive of interest) and fixed asset depreciation at year end.
@ nazeef
in the chart of accounts create:
fixed asset car
sub fixed asset account car accumulated depreciation
loan liability account car
and if you do not have depreciation on any other assets, create an expense account called depreciation expense
open the register for the loan account you created and make a new entry as an increase in the amount of 4,000 and use the fixed asset car account in the account block
write a check on the bank you paid the down payment from and use the fixed asset car as the expense for the check, enter the amount 1,000
You make payments to the loan using the loan account as the expense for the payment, when you get next months statement in, it will show the amount of the previous payment that was interest, do a journal entry back dated
debit interest expense for the amount shown on the statement
credit loan liability account
annually you calculate and post accumulated depreciation using a journal entry
debit depreciation expense
credit car accumulated depreciation
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