Down payment on a fixed asset


R

Robert

Hi'
This is my first post. My question is about a car I just purchased for my
business. I put some money down and financed the rest. How do I record the
down payment?

Thanks!
 
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J

John

Robert said:
Hi'
This is my first post. My question is about a car I just purchased for my
business. I put some money down and financed the rest. How do I record the
down payment?

Thanks!
sometimes it's better (taxwise) owning the auto outside the company
(individual) and using an "accountable plan" to reimburse expenses. if you
have a business talk to a local accountant
 
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A

Angela Thornton

John said:
sometimes it's better (taxwise) owning the auto outside the company
(individual) and using an "accountable plan" to reimburse expenses. if you
have a business talk to a local accountant
I'm not going to argue that, but in the interim, you credit cash and
debit the appropriate balance sheet account. Supposing the down
payment was $5,000 and the loan is $15,000 -

CR Cash 5000
CR Loan Payable 15000
DR Asset Account - 20000

Then, when you begin making the $250 per month payments, they will
look something like:


DR: Interest Expense $ 50.00
DR: Loan Payable $200.00
CR: Cash $250.00

Then, you'll also begin to expense the vehicle with entries something
like:

CR: Accum Depriciation $200.00
DR: Depriciation Expense $200.00

HTH,
Angela
 

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