Hi All, a Corporation purchased an investment property from a builder and paid a down payment. The property will be ready in 2024. The purchase price is 550,000. The down payment is 50,000. What is the best way to record this transaction in quickbooks. Should I set up a new account Prepaid property 123 and show 50000 deposit? Any guidance would be appreciated. Thanks.
A bookkeeper would not have any idea how to bookkeep if ANY journal entry was recorded in ANY way other than EXACTLY recording what was written in the underlying authoritative document.
In this case, the EXACT written contractual terms, (which of course already exist, since all dealings in real property must be in writing) in the legal written document. The Corporation’s Lawyer and the Corporations Accountant may be able to assist in this case as to the specific contractual terms.
I agree with Joe that you need to check the documentation to determine the correct accounting. From what you’ve said, you are likely correct that the deposit should be in a prepaid or deposit account (current asset if the deal will close within the year). Then transfer it to the capital asset account upon closing. Not that you asked but you can’t claim any CCA on the property until the asset is actually acquired and available for use.
I suggest you contact a Quickbooks ProAdvisor - use the search function on the Intuit website. Or post the question in the Quickbooks Community forum (rather than this TaxCycle forum). Or, take some Quickbooks training - Intuit offers a lot of free training for their software.
It’s not actually a QB issue. It’s a Bookkeeping 101 issue.
Yeah, I know. I guess I should have added a winking emoticon/emoji…whatever you call em.