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