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:
For example:
Step 2: Setup an Other Income Account
For example:
Step 3: Setup an Other Expense Account
For example:
Step 4: Setup an Asset Account.
For example:
Step 5: Setup another Other Expense Account.
For example:
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.)
For example:
Note:
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
For example:
Step 8: Add a Cashbook transaction to record a loan repayment
For example:
Note:
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: