Entering Fixed Assets as Journal Entries

When entering fixed assets using the 1-3 screen, the correct accounts should be used for debits and credits. Typically, the accounts might be something like this:

Account Debit Credit

18010 – Ford Truck (Purchase Price)                   20,000.00
28010 – Ford Truck Loan (principal only)                                          18,000.00
10000 – Checking (down payment)                                                  2,000.00

                                                                   20,000.00                20,000.00

The important things are that: 1) Debits = Credits; 2) there is an asset account which declares the actual asset value of the vehicle (purchase price) and a long-term liability account which declares the principal loan amount.

When a monthly payment is made again the loan, it would typically look like this:

Account Debit Credit

28010 – Ford Truck Loan Payment                      200.00
68010 – Loan Interest                                      34.77
10000 – Checking (actual check amount)                                         234.77

This can be accomplished in the 1-1 screen by displaying the two debits in the grid. Or is you really want to run it through A/P and pay an invoice, display the two debits in the grid of the A/P invoice screen.

When the asset is depreciated, your CPA should give you a journal entry to accomplish that.

There other possible scenarios, such as when the interest and principal change every month. To implement that, you would need a schedule from the lending institution showing the principal and interest monthly over the life of the loan. This summary covers the basic idea. Please let me know if you have a specific different circumstance you want to implement.

Please contact me if you would like to learn more about instituting a comprehensive training process. Thank you.

Andy King
T: 805-771-8400
service@missiondevelopment.com