Recording Reservation Deposit

Accounting
1

Hi,

I am using quickfile for a limited company involved in purchase and letting of residential property.

The company doesn’t currently generate any income, so any money required is being loaned by me to the company.

I need some assistance around recording transactions correctly.

So, I loaned the company £5000 for deposit on a property. This currently sits on the Director Loan account as a liability.

I then created a supplier (the company I am buying the property from) and wanted to record the deposit payment as a purchase. However, I could not see an appropriate category to record it against. In the ledgers I can see Freehold property, under assets - but this is not available as a purchase category.

What I want to do is record the £5000 deposit payment, and a further 1st stage payment on the property of £35K as a purchase so I have an audit trail of who I paid the money to, and the money paid out in the form of deposit and first stage payment, needs to end up on my balance sheet as a fixed asset (Freehold property).

What is the best way to achieve this please?

2

OK - just an update to this. If I record the reservation deposit as a purchase from the company building the property and record it as capital expenditure (asset) - can I then create a journal entry to move this from capital expenditure (nominal code 12) to Freehold Property (nominal code 10?)

3

Hi @Enfopaul

I’ll certainly try to help.

I checked this with a colleague, and both 0010 Freehold Property and 0011 Leasehold Property should have been available on purchases. We’ve just changed this so they should now show in your list of available nominals.

I can’t see any issues with the way you’ve recorded things so far, however, I’m not an accountant so it may be worth running it past one just to be on the safe side.

This should be possible. I believe there are very few restrictions when it comes to journals and most, if not all, codes are available.

I hope that helps!

4

Wow - that’s an impressive response time - thank you very much.

To confirm, I’ve just gone back to the original purchase, and I am now able to see the Freehold Property listed as a category so I can just go ahead and record the reservation deposit against that category. That being the case, I no longer need to use the journal entry as it will now be recorded accordingly and show up in my balance sheet as an asset.

Thanks again for your very responsive support.

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