dfg said:
I am a contractor and just bought several pieces of heavy eqiupment. Paid
cash down and financed the balance over 60 months. How do I set this up?
First set up a Notes payable (long term liability), Interest expense, a
fixed asset, an accumulated depreciation (asset) and depreciation expense
accounts if they don't already exist.
Either use the Task>>Payment screen or a journal entry to:
Debit Fixed asset for amount of equipment purchased (cost)
Credit Cash
Credit Notes Payable.
When you make a payment post the following:
Debit Notes Payable for amount of principal paid
Debit Interest expense
Credit Cash
Check with your accountant as to how often and how to calculate the
depreciation associated with the equipment. When you make the entry post it
the following:
Debit Deprec expense
Credit Accumulated Depreciation
HTH,
Laura