Need Help WIth Journal Entries in Quickbooks?
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I purchased a business this year from a guy for 75K. I took out a personal loan from the bank for 25k as a down payment to the guy. He is financing the remaining 50k. According to my accountant I need to show all of this on the journal as fixed assets, long term liabilities and what not. He said one account would be cost of business, another would be due to officer, and another would be due to seller. I'm a sole proprietor so the loan payments are out of my personal checking account. I just need to show my payments and don't know who to debit or credit for each month for each loan. Can anyone tell me hwo to set up these accounts? Thanks in advance.
Need Help WIth Journal Entries in Quickbooks?The $25 you paid is your capital which should be recorded as a credit to your capital account (what the accountant called "due to officer"). Another account with a credit balance is the note payable to the seller. This is a long-term liability. All the rest are the assets you bought, which includes inventory, accounts receivable, equipment, land, buildings, etc. You should assign a fair value to each asset, and if that does not add up to $75,000, the balance is assigned to goodwill as a debit. If the fair value of assets add up to more than $75,000, you are overvaluing some of the assets. In Quickbooks, you make a journal entry with $75,000 of debits assigned to assets, $50,000 assigned to long-term debt, and $25,000 assigned to capital or owners' equity.
That is a start, but as you operate your business you will have to keep track of revenues and expenses to arrive at net income, and for the payment of the liability, including interest.
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