How do I setup all accounts associated with the purchase of an asset via a loan?
How do I enter the purchase of the asset via a loan into Cashbook?
How do I add the asset to the Fixed Asset Register?
How do I enter a loan repayment?
Note: you will need to be on Cashbook Level 3 or above to setup a loan account using this procedure.
Steps to setting up the purchase of an asset via a new loan:
Step 1: Setup a Liability (Loan) account:
Step 2: Setup an Other Income Account
Step 3: Setup an Other Expense Account
Step 4: Setup an Asset Account.
Step 5: Setup another Other Expense Account.
Step 6: Setup an Interest expense account
Note: The principal is the amount you borrowed and have to pay back, and interest is what the lender charges for lending you the money.
Step 7: Cashbook entry to record purchase of asset via a loan. (and add asset to Fixed Asset Register.)
There are two methods you can use to calculate asset depreciation.
Click on the following ATO website link: https://www.ato.gov.au/business/depreciation-and-capital-expenses-and-allowances/general-depreciation-rules---capital-allowances/prime-cost-(straight-line)-and-diminishing-value-methods/ for further information.
Note: The sections coloured Red must have information entered in them. The other sections are optional
Step 8: Add a Cashbook transaction to record a loan repayment
The credit balance of your liability account (e.g. 701.01 JD tractor Loan) should agree with the loan balance shown on the loan statement furnished by your lender. If such a statement is not provided, you can phone your lender and ask for the principal balance on your loan.
To view the balance of your liability account/s at a given date, look at your Trial Balance: