Purchase of Asset on Loan entry

I appreciate you for reaching out here in the Community, @Hetavi Thakkar. I'll share some information about recording a loan for purchasing new asset in QuickBooks Online(QBO).

Please keep in mind that the following instructions only cover the essentials of how to set up asset loans. When determining the initial value of a purchase, a lot of factors are considered, including the trade-in, down payment, fees, taxes, and so on. Consult your accountant for advice on how to account for these factors.

To record a loan for purchasing a new assets, you'll first need to set up a liability account. Depending on the repayment time frame, chose either Current Liability or Long term liability.

In case you're going to choose Current Liability, please know that you'll need to pay it in full within one year. On the other hand, Long-term Liability has to be paid for more than one year.

Once you're ready, you can now proceed to set up a liability account for a load. To begin, these are the steps:

1. Go to the Gear icon.
2. Under Your Company, select Chart of Accounts.
3. On the right, click New.
4. Select either Other Current Liabilities or Long-term Liabilities.
5. Choose a detail type and then select Next.
6. Name the account and then Leave the Unpaid Balance blank.
7. Once done, hit Save.

Now that you've already created an account for the loan, you'll need to create a journal entry to apply the loan to the correct asset accounts. To begin, here's how:

1. Select +New and then under the Other column, choose Journal Entry.
2. For the first line under the Account column, select your new liability account.
3. Enter the amount for the load you're applying to the asset under the Credits column.
4. For the second line, select the appropriate asset account under the Account column.
5. Under the Debits column, enter the amount of the load you're applying to the asset.

You can refer on the example below.

Once again, I recommend reaching out to your accountant. This way, they can provide you with the best possible option to do this.

Additionally, I'll be leaving these articles for future reference:

• Set up an asset account in QuickBooks Online
• How to apply a journal entry credit to an invoice

If you need help with performing specific features in QuickBooks, you can always reach out to us here in the Community. Rest assured, we are always ready to assist you. Keep safe and stay hydrated!