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turleylisa
November 30, 2021
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Trying to Set up new auto loan

  • November 30, 2021
  • 1 reply
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I'm looking for some help setting up the proper accounts for my new auto loan.

I followed the help article "How do I record the loan for an asset" Which said you need to create a 

long-term liability account which I did (don't know if I did it correctly)

Then I followed the info that said to create a journal entry showing the new liability account and 

applying the loan amount to the asset under credit.

Then line two would be selecting the asset account under account and enter the same amount in 

the debit column.

When I looked at my chart accounts it shows it as the amount in the long-term liability account and the

new one I created. Then it is also showing the amount in the fixed asset account I used.

I'm so confused and I don't know how to fix it. Obviously I don't know what I'm doing. 

I need to know how to fix this so I can enter my payment to the correct expense account etc.

I have not made any payments yet, but I do have my down payment sitting in my bank feed because

I don't know what to do with it.

Any help is MUCH appreciated.

 

Thank you,

Lisa

Best answer by Rustler

Buying an asset is not an expense.

 

Create the following

a liability account

a fixed asset account for the asset and a fixed asset sub account name accumulated depreciation

an expense account called depreciation expense

 

do a journal entry

debit the fixed asset account and credit the liability account for the amount being borrowed.

If you made a down payment, enter the payment and use the fixed asset account as the expense (reason) for the payment

 

the accumulated depreciation and depreciation expense accounts are used at the end of the year. You get the number from the IRS pub 946 and do a journal entry

debit depreciation expense and credit the fixed asset accumulated depreciation account for the amount of the depreciation

1 reply

Rustler
RustlerAnswer
November 30, 2021

Buying an asset is not an expense.

 

Create the following

a liability account

a fixed asset account for the asset and a fixed asset sub account name accumulated depreciation

an expense account called depreciation expense

 

do a journal entry

debit the fixed asset account and credit the liability account for the amount being borrowed.

If you made a down payment, enter the payment and use the fixed asset account as the expense (reason) for the payment

 

the accumulated depreciation and depreciation expense accounts are used at the end of the year. You get the number from the IRS pub 946 and do a journal entry

debit depreciation expense and credit the fixed asset accumulated depreciation account for the amount of the depreciation

T
turleylisaAuthor
December 1, 2021

Hi,

Sorry for the delayed response here. Thank you very much for your help.

I was able to get things in the proper places. Now i'm set and on track.

 

All the best,

Lisa

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