Hi everyone, Bobbie Witt with Bookkeeping Confidential here with you today. We are a virtual bookkeeping firm here to assist you in realizing the profit for your business and any other bookkeeping needs that you might have. Today, I want to share with you how to record a vehicle loan purchase in QuickBooks.
I went ahead and created the accounts in the chart of accounts to save some time.
Record a vehicle loan purchase – Step-by-step
Let’s say you buy a vehicle for business use only. If you are going to add personal, you will need to contact your CPA and the rules of that and tracking it. We’re going to go up to the plus sign. And, here, you’re going to do a journal entry. You’re going to date it, ie. input the date of the vehicle purchase. The importance of this is so that your CPA knows when to start the depreciation of that loan. Also, the vehicle is an asset. So, we’re going to look for the vehicle – Fixed asset. We’re going to debit it. Let’s say 24,000 – keep it even, And, we also need to offset that debit with a credit.
Follow along with video below
We borrowed the 24,000 from the bank to get this vehicle. We need to record the loan. So, we go down here, type vehicle loan,24,000. If you want to put in a description of the vehicle that’s not a problem. Save and close. Your vehicle is now recorded on your balance sheet. And it’s got the asset listed and the liability listed.
Now, the time comes for your monthly payments. So, you’re going to do your expense, and your payee is not going to be Book by Bessie. Let’s go with EDD. I don’t know what that is, but let’s use it real quick. So, now you’re going to look for your auto expense. There is your auto interest, that’s the interest part of your loan every month; $25. Now, you want to take your principal and apply it to your loan that’s on your balance sheet. And, it’s right there, vehicle loan. And that’s 375 because your car payment is 450 per month. Now, that payment will reduce your principle here on your balance sheet by $3.75 and also your interest will be recorded as an expense.
If you need more help in setting up this sort of thing on your income sheet and balance statement, please feel free to contact us. Thank you!