How To Record an Owner Financed Sale Of An Asset in QuickBooks

By

Nerd

– February 27, 2012Posted in: Balance Sheet, Disposal of Assets, Journal Entries, QuickBooks Help, Transactions

• Facebook
• Twitter
• Delicious
• Digg
• StumbleUpon
• Add to favorites
• RSS
• PDF
• Posterous
• Blogger

I’ll gladly pay you Tuesday for an asset today!

When you sell an asset and finance it we call it an “owner financed sale of an asset”. Rocket Science this is not! Broken down in slightly simpler terms.. We sell an asset and let the buyer pay us off in the form of a loan. Once you have it described in these terms then it should be pretty clear how to record an owner financed sale of an asset in QuickBooks. We need an entry that does the following:

• Write the asset off the books.
• Recapture the accumulated depreciation.
• Record the loan receivable (this would be the cash received in an ordinary sale).
• Record the gain/loss on sale

Once you record the initial entry you will want to create a payment scheduled based on the loan amount, interest rate and the term over which you’ve agreed to be paid. This is pretty easy to create if you know your Excel, if not you can use my effective interest table which is available in my knowledge store.

Watch my video on Owner Financed Sales of Assets and please post your comments and questions below!

Tweet

Tags: Interest Income, Loan Receivable, owner financed sale of an asset

About Nerd

I started Nerd Enterprises, Inc. in 2003 and continue to work with individuals and companies to cure their financial headaches. Writing, Blogging, Social Media and generally building communities around these areas as well as technology has become another passion of mine.

4 Comments

1. Matt

   Posted August 12, 2012 at 9:52 PM

   What if I bought the business and the former owner provided financing, how is this handled in Quick Books?

   Thanks,

   Matt

2. Nerd

   Posted August 18, 2012 at 8:30 AM

   I think that was actually covered in the post, but essentially you have an asset on the books for the purchase price of the business and a liability for what you owe the person who sold it to you.

3. dustan day

   Posted January 6, 2013 at 8:00 PM

   I would like to track the sale of a piece of property that I received in inheritance with this method. Just one question though. Would the inheritance property be set up as ‘other asset’ OR ‘fixed asset’ or does it matter? I would like to have you review my setup of quickbooks. How much would this cost? thx. DD

4. Nerd

   Posted January 24, 2013 at 9:50 PM

   Hey sorry I just saw this! The property gets recorded as a fixed asset regardless of how you acquired it. Then because it was an inheritance, where you normally might have a loan in connection with it’s purchase you will instead have an equity contribution based on the value of that property at the time of the inheritance.

   If you haven’t already found other help I can still help you. Just sign up at http://www.QuickBooksAnswers.Info