When entering fixed assets using the 1-3 screen, the correct accounts should be used for debits and credits. Typically, the accounts might be something like this:
| Account | Debit | Credit | ||||
| 18010 – Ford Truck (Purchase Price) | 20,000.00 | |||||
| 28010 – Ford Truck Loan (principal only) | 18,000.00 | |||||
| 10000 – Checking (down payment) | 2,000.00 | |||||
| _________ | _________ | |||||
| Totals | 20,000.00 | 20,000.00 | ||||
The important things are that: 1) Debits = Credits; 2) there is an asset account which declares the actual asset value of the vehicle (purchase price) and a long-term liability account which declares the principal loan amount.
When a monthly payment is made again the loan, it would typically look like this: This can be accomplished in the 1-1 screen by displaying the two debits in the grid. Or is you really want to run it through A/P and pay an invoice, display the two debits in the grid of the A/P invoice screen.
| Account | Debit | Credit | ||||
| 28010 – Ford Truck Loan Payment | 200.00 | |||||
| 68010 – Loan Interest | 34.77 | |||||
| 10000 – Checking (actual check amount) | 234.77 | |||||
| ________ | ________ | |||||
| Totals | 234.77 | 234.77 | ||||
When the asset is depreciated, your CPA should give you a journal entry to accomplish that.
There other possible scenarios, such as when the interest and principal change every month. To implement that, you would need a schedule from the lending institution showing the principal and interest monthly over the life of the loan. This summary covers the basic idea. Please let me know if you have a specific different circumstance you want to implement.
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