How do i set up a loan-which owner is carrying contract for building

Question:

I recently purchased a building for my business -where the owner is carrying the contract.  how do I enter the process in Quickbooks-  the original price was 75,000 with 10,000 down – paying monthly at 8% interest – $504.00 monthly payments

Answer:

Journal entries will look like this:

One-time Journal Entry # 1 (for example)

  • Building ( Fixed Asset) — $75,000 (debit)
  • Bank Account — $10,000 (credit)
  • Long- Term Buidling Loan 000 $65,000 (credit)

Monthly Journal Entry # 2 (for example)

*** need to get exact breakdown between interest and principal on $504 monthly payment ***

  • Interest Expense — $500.00 (interest exp = debit)  (example only)
  • Long-term building loan — $4.00 (prinicipal payment = debit) (example only)
  • Bank Account — $504.00 (monthly payment = credit)