QuickBooks plays a vital role in handling the transactions of fixed assets, i.e., buildings, machinery, cards, etc. In addition, users have the ability to keep track of depreciation for these assets. By tracking the depreciation, one can make smart decisions on whether you should keep the assets and when you should sell them. Therefore, keeping data of such immovable or movable assets is necessary. Before you find out how to record a vehicle trade in QuickBooks, one should know the difference between Fixed Assets and Depreciation. Besides that, you should learn to record a trade in vehicle, vehicle purchase in QBO & desktop, vehicle loan purchase, and setting up a new vehicle loan.
About Fixed Assets and Depreciation
Intuit suggests, before learning how to record a vehicle trade in QuickBooks and handle the transactions, one should understand the main two key points; Fixed Assets & Depreciation.
Depreciation: When the worth of fixed assets is reduced over the years, it is called Depreciation. Generally, the depreciation is calculated on the fixed assets because they are expensive.
Fixed Assets: The assets you purchase for use for the long term are known as Fixed Assets. Such assets are quite expensive compared to the variable ones. Also, they are meant for regular use. It includes machinery, land, and cars.
How to Record Trade in of Vehicle in QuickBooks
To enter the fixed asset or purchased vehicle, you need to create the fixed asset account for your vehicles. Thereafter, you can add your purchased vehicle and then create the liability account.
Step 1: Preparing the Fixed Asset Account for the Vehicles
For recording QuickBooks trade in vehicles, you will have to create the Fixed Asset account with an appropriate name.
- Navigate through the “COA” option.
- Then, choose the “New” option.
- Here, you can choose the “Fixed Asset” option from the provided categories.
- At this point, you can type the name as well as an account description.
- Once done, click “Detail Type”
Step 2: Adding the Vehicle
Once the Fixed Asset account is prepared, you can add your purchase to this account. By doing so, you can handle loans and depreciation easily.
- First of all, you need to add the purchase. Then, link this purchase to your “Fixed Asset Account”. This should be the same account you created in Step 1.
- After that, you can manage your depreciation, loan, and liabilities with a fresh asset.
Step 3: Setting Up a Liability Account
Fixed Assets purchases can also appear with linked liabilities, e.g., EMI or loan payments. Thus, to record your whole transactions properly, you will have to enter the liability and track it.
- For setting up the liability account, go to the “Gear” button.
- Then, select the “Account & Settings” button.
- Press the “New” option.
- Here, you can select the “Long-term Liability” option from the available options.
- Once done, click “Next”.
- Now, you can add the information for your account, e.g., Name.
- After recording every detail, press the “Save” option.
Now, you can easily prepare the long-term tangible asset account for your vehicle, add the vehicle that you have purchased to your Fixed Asset account. Thereafter, set up the liability account to record the whole transaction.
Record Vehicle Purchases in QuickBooks Desktop
To record the vehicle purchase in QBDT, you need to add a new check and enter the necessary details. Make sure you choose the correct credit card or bank account. After selecting the category of account, you can enter the vehicle amount and save details.
- Open “QuickBooks Desktop”.
- Then, go to the “Plus (+)” button.
- After this, choose the “Check” button.
- Here, you can enter the required details.
- Now, you can select the “Credit” or your “Bank” account.
- Select the “Category” button from the drop-down option.
- Click on the “Asset” account to which you wish to add the vehicle purchase.
- Now, type the vehicle amount.
- Once done, click “Save & Close”.
As you perform these steps, the vehicle purchase is recorded on the QB desktop. Make sure you enter every detail correctly, especially bank details and vehicle amount.
Record Vehicle Purchase in QuickBooks Online
QuickBooks Online users can also record the vehicle purchase. All you have to do is to add the items of the fixed asset.
- To get started, launch “QuickBooks Online”.
- Then, start adding your item of the fixed asset to the account. To do this, you can follow these steps:
- Go to the “Lists” button.
- Choose the “Fixed Asset Item List” button.
- Here, you can select the “Item” option on the left.
- Once done, select the “New” button in order to add a new one.
- When the new box opens for the fixed asset, you can enter the required details for the vehicle you purchased.
- After this, when you see the purchase details, make sure you enter the correct information about the vehicle and account that you are going to connect.
- Move to the “Asset Information” section and then enter the details related to the new vehicle purchase.
- Once done, press the “OK” option.
Once you are done executing these steps, the purchases of your vehicle are successfully recorded in QuickBooks Online. Make sure you enter the correct details in dedicated fields to avoid confusion in the future.
How to Record the Purchase of a Vehicle Loan in QuickBooks?
If you want to record the loan purchase of a vehicle in QuickBooks, you can do that easily. All you have to provide is the relevant details related to bank and payments.
- Login into the “QuickBooks” account.
- Then, select the “Plus(+)” icon.
- After this, hit the “Check” button.
- At this point, you need to specify the details for the available options and complete the fields.
- Once done, add the check number if you are planning to pay by check. In case you prefer to pay online then choose the “EFT” method or the “Direct Withdrawal” method.
- Whichever method you select, enter the details accordingly for “Debit” or the “EF” fields.
- Moving on to the “Account Info” section. Here, you can enter the information in each line. For instance,
- In Line 1, you will see the payment amount paid to your principal as well as your liability account for a loan.
- Moving on to the 2nd Line, the amount is for interest you have paid. Here, you can also add your interest for the expense account.
- In case you see any feeds, you can add that too in the remaining lines.
- Once done, select the “Save & Close” option.
As you follow these steps, the vehicle loan purchase is recorded in the QuickBooks account. Users have to make sure that the check number, account details, and amount of payment are entered correctly.
How to Add a New Vehicle Loan in QuickBooks?
If you are planning to set up a new vehicle loan in your QuickBooks Online account then you have to add a fresh account in the QB COA. Thereafter, you can choose the account type, add necessary details, and save changes.
- In QuickBooks, go to the “Gear icon” button.
- Then, select the “COA(Chart of Account)” button.
- After this, select the “Plus(+)” button to set up the new account.
- Here, you can choose the “Current” option. Or, you can select the “Long-term Liability” option.
- Once done, you can choose the “Detail Type” of your liability. You will see this description right there.
- Press the “Next” option.
- Specify the account name.
- Here, you can skip the “Unpaid Balance” blank and press the “Save” button.
This is how you can set up the new vehicle loan in QuickBooks Online. Please note that you skip the Unpaid Balance field because this will be handled later.
How to Record the Loan Amount in QuickBooks?
To record the amount of loan as well as the depreciation, you are required to enter the journal entries. Also, these entries can be connected to a particular account.
- Go to the “Create” option.
- Then, select “Journal Entry”.
- Press the “Account” option.
- Choose “Liability Account”.
- Type the amount on the field labeled “Credit” for your loan.
- Now, choose “Asset Account” to which you wish to link a loan amount.
- After that, type the amount of loan in the “Debit” field.
Make sure you record every payment made for your loan. This can be done by adding checks and then connecting them to your loan. This is how you can record the journal entry to set up a loan in QuickBooks.
In order to enter depreciation, you can perform the same steps that we have provided for a loan. All you have to do is select a Depreciation account in the place of a long-term loan option. In addition, you will need to set up journal entries regularly to track depreciation. Remember you will have to calculate depreciation.
If you want to handle transactions of your fixed assets then you can create the fixed asset account, add your purchased vehicle and then create the liability account to record the whole transactions. Hope this resolves your query about how to record a vehicle trade in QuickBooks including some helpful information regarding vehicle loans.
To record deposits and reopen the closed purchase order, you can go through these guides:
- How to Reopen a Closed Purchase Order in QuickBooks?
- How to Record Deposits in QuickBooks Online?