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Y
Yogi
February 17, 2024
Question

Installment Sale invoicing and Balance Sheet presentation

  • February 17, 2024
  • 2 replies
  • 0 views

I have a client who is selling assets on an installment basis to a current regular customer. The two of them want to see invoices produced for each additional item included in the agreement as that item is added. They also want to produce invoices for interest charges. This is an installment agreement that I think should be presented on the Balance Sheet as an account separate from Accounts Receivable. However, it seems to me that in order to product and track invoices, these transactions would have to go through a customer that is attached to A/R. How can I honor the buyer and seller's invoicing request and still have proper balance sheet presentation?

2 replies

G
GenmarieM
February 17, 2024

It's nice seeing you here at the Community, @Yogi.

 

I'm here to share some insights about installment invoicing and balance sheet presentation in QuickBooks Online (QBO).

 

You can consider setting up Recurring invoices for your installment. However, it is important to note that it will pass through Accounts Receivable A/R since they are invoice transactions.

 

For further assistance and to ensure compliance with accounting standards and best practices, it would be beneficial to consult with your accountant. They can provide tailored advice based on the specific details of your business and ensure that the transactions are recorded accurately.

 

Furthermore, I'm adding this helpful article as your reference in recording invoice payments in QBO: Record invoice payments in QuickBooks Online.

 

Return to this post if you have other concerns about your invoices and reports in QBO. I'll be here to lend a hand.

Rainflurry
Rainflurry
February 18, 2024

@Yogi 

 

Can you provide any more details?  Does your client have a purchase agreement with the buyer that spells all this out?  Each asset needs to be removed from your client's BS and the appropriate amount of gain/loss needs to be calculated on each.  Each asset being sold will need its own receivable IMO.        

Y
YogiAuthor
February 18, 2024

This has been agreed to - a bulk sale with transfer taking place on two different dates. I know that the assets need to be removed from the Balance Sheet at the time of transfer. My question was how to prepare an "invoice" as requested by the purchaser so that it would be documented. My concern is that this transaction is not a normal customer sales transaction and should not be presented as such within A/R.

Once the buyer has his invoice, I can make an adjusting entry for the proper Balance Sheet presentation and attach the invoice to it. 

Rainflurry
Rainflurry
February 18, 2024

@Yogi 

 

I have done several installment sales and they have all been handled the same way.  Agreed that the seller carry is not A/R.  I would use an other current asset account called 'Note Receivable - Buyer XYZ'.  Then, make the journal entry(ies) to remove the asset(s) as needed on the transfer date -  close accumulated depreciation, book the gain/loss, the down payment (if any) and the difference to the newly-created Note Receivable - Buyer XYZ.  Then, create a service item with the income account assigned to Note Receivable - Buyer XYZ and use that on the buyer's invoice for the principal portion and, obviously, an item assigned to interest income for the interest portion.  Forgive me if you know all/most of this. 

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