We bought some laptops on finance. We acquired the laptops on the day on purchase and are paying them off every month.
I am not sure how to account for this, any help would be greatly appreciated!
The credit on the laptop should feature as a liability on your accounts. Normally you would create a “Loan account” in the bank management section and then enter a purchase invoice making sure to pay the invoice from the loan account.
Each month as you make the repayments you would transfer the sum from your current account to gradually pay down the loan balance. Any payments over the principle amount (i.e. interest) are entered onto the loan account and tagged to bank charges or interest paid.
Ah awesome, so what I’ve done is:
- Created a purchase for the laptops (quoting total on receipt)
- Created designated loan account for this loan
- Entered a single transaction (outgoing) for the total amount in the loan account
- Tagged the transaction to the purchase (purchase is now paid in full and loan account is now in minus figures)
- Then tagged all repayments from current account as a transfer to the loan account (showing the minus figure in the loan account increase thus leaving me with how much I still owe)
This sound right? Thanks again for all your help!
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Yes that sounds exactly right!