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  #1  
Old 12-18-2006, 08:14 PM
novice06 novice06 is offline
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Question Setting up new account for Car Loan

Bank account in QB. Money from there to the Credit union account and it is more that the amount of the payment they will take out each month for the car payment. How do I set up this account/accounts. Once the excess monies add up to another payment every three months, an extra payment will go to the principle on the car loan. I am probably trying to hard, but since a different amount goes into the credit union savings account than what is withdrawn by them for the car pmt ea month, I am confused as to how many accounts I need to set up and how to post these transactions. Any help is greatly appreciated.
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Old 12-18-2006, 11:28 PM
brecor brecor is offline
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First thing, you will need to setup another bank account to reflect the credit union account the funds will be transferred to. Second, is there a breakdown per payment of what is allocated principal portion and interest portion? Ideally you only want the long term liability with the principal balance (amount financed per loan documentation) and the interest allocated to interest expense monthly. To get the loan on the books, debit the 'Automobile' fixed asset account, and credit a new 'Auto Loan' long term liability account via a general journal entry. Each month when payment is made, record the principal portion to the l/t liability account, and the interest portion to interest expense.
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Old 12-19-2006, 06:26 PM
novice06 novice06 is offline
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Let me see if I understand you correctly. The account that the money goes into for the car pmt to come out of is the Credit Union Savings account. Set that bank account up first. Done. But I can't use the transfer option because I write a check and take it to a different bank for deposit. So when in that window how do I split that amount out under expenses tab. Does an amount go to "auto loan l/t liability" also to "interest expense" and the excess balance to the savings account? I don't understand the getting the loan on the books part of your answer. Debit fixed asset account by what figure from where and credit via the general journal entry? It sounds like I would be double entering? On the second point, I do have access to what portion is applied to principle and interest, after the fact, thru online info. I think I'm confused about getting loan on books and recording to how many accounts? I have created four new accounts in the chart of accounts list. 1. Credit Union Savings/Bank. 2. Auotmobile/Fixed Asset. 3. CU Auto Loan/LT Liability with the begining loan amount 4. Interest Expense/exp. As I mentioned, more than the amount of the payment goes into the savings/with dividend-interest account. I
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Old 12-19-2006, 06:57 PM
brecor brecor is offline
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From your checking you will just code it to the Credit Union Account at the bottom and that will show it as money going into that account (like a deposit).

Do you already have the figure for the auto asset in there? If so then you can just enter open balance in the loan account like you did, however thats not my way of doing it since it puts the other side into open bal equity.

Now in the credit union account you will show a check each month (no number since its auto debit) for the amount being paid and there you will split out between the principal portion and interest portion.
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Old 12-19-2006, 07:41 PM
novice06 novice06 is offline
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As to your three points/paragraphs. 1. So from Write Checks, exp tab, CU acc, that seems to work. 2. There is no figure in the auto asset acc. and I don't understand that paragraph. Where do I get that figure?sorry. please keep trying. 3. Is this where I do the general journal entry, after I get the figures for the amounts, to then split out to principle and interest? I did this for the first pmt that has happend.
When I open the CU Saving account it now shows the deposited amt with chk # made to cu, and then it shows a payment that i gen jour entered and split to the auto loan LTL and interest exp.
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Old 12-20-2006, 12:25 AM
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The purchase of the vehicle should have been recorded either as a check or a journal entry. Let's pretend it was a check:

You write a check to Joe's car lot for say, 5,000. But the purchase price of the vehicle is $30,000 and now you owe the bank $25,000

On the check entry, in the expense area, you would use a fixed asset type account to record the vehicle of $30,000 then on the next expense line, you would use your liability account for the loan and enter -25,000 to give you a net check of $5,000

Take your purchase agreement for the car and all the numbers you need will be on there. You'll also have some expenses for taxes, registrations, etc. so you may have some extra expense accounts to create for those.
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Old 12-20-2006, 01:43 PM
novice06 novice06 is offline
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First, I so much appreciate all the feedback. Now, after having read the commemts from Lisa, I remembered the following: That it would work if that is how it went, but... as usual always a snag. The down payment (yes it was a check) came from a different account not reflected in the business account books until becoming linked at tax time, of course. That down payment was listed in the the other account also as a LT/L, probably not correctly? And so now it has a negatinve amount showing in that acc. that will never show up as changed. Only the payments are coming out of the business account and that is the amount showing in the list for the LT/L loan. This will now be more reason for confusion. So must I start over as to how to allocate or what? Can I just do what you suggested with the amount it started from after the downpmt, using the first check amount that I deposited in the CU? Or would it make sense to write a new check from the business to that other account and then follow your advice for entries.
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Old 12-20-2006, 02:43 PM
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You should really have your tax person sort it out for you. They know how everything was treated on prior tax returns, so they should be able to help you now.

It's really too complicated to go into in this forum.

Best of luck!
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  #9  
Old 11-23-2009, 09:29 AM
collymore collymore is offline
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Car Loan required: London Taxi Company

Hi,

We are a taxi company Hummingbird Cars in London. We provide Airport Transfer service from all london airports.

We have recently started our business and are looking for a good financing source with cheap interest rates .But, we are in a sort of confusion as there are so many Car loan providers which one is the better one it is difficult to select.

So, Can anyone please advice us where we can buy best and most reliabel Insurance for our cars.

http://www.hummingbirdcars.com

Thank you
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