Work Truck Down payment paid for with personal Credit Card
TODavid69
Member Posts: 15
I recently started my business and did not have a company credit or debit card yet. I used a personal credit card to make the down payment. Once the purchase cleared, I used business funds from a business checking account to make two separate payments to my personal credit card paying off the down payment balance. How do I show this in Wave?
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@TODavid69,
Your first need to record the down payment. Create a journal entry under Accounting/Transactions. Top right under more. You will want to debit an Asset (create Vehicles if needed) and credit owners contribution. For the re payments you would just categorize the payments to yourself as draws.
Thank you very much for the information to start the down payment Mike. I created to Down Payment as a journal entry the day I charged the personal Credit Card. The remaining balance of the loan was pulled from B of A. The total asset should be $31,600 but the asset is $5000 more than it is worth because the two payments went to the truck. How do I categorize the two payments of $4250 and the $750 because it was 100% principle to the truck purchase? I do not what to show those as an asset addition on the balance sheet.
I made an expense account "Vehicle - Down Payment" and it pulled the extra $5000 out of the ASSET, making the Truck price correct, but now that $5000 is sitting in that expense account. Is this right?
@TODavid69,
If you paid yourself back, that is probably where the 5k should go and not an expense. For example, lets say I purchase a truck. The dealer wants 35k including taxes, tags etc. I put 5k down out of my own funds and finance the rest. I then pay myself back the 5k from the business. The way it would work would be:
My down payment - Journal entry
Debit Vehicle (asset) 5,000
Credit Owner Contribution 5,000
Post loan - Jounral entry
Debit Vehicle (asset) 30000
Credit Loan Payable BOA (long term Liability) 30000
Paying myself back transaction journal or Journal entry
Debit Owners Draw/Contr 5,000
Credit cash 5,000
My Vehicle total would be 5,000+30,000=35,000
Loan 30,000
Owner draw 5,000-5,000=0 effect
Also, keep in mind that if you are posting a vehicle in the business it should be titled in the business name.
It makes perfect sense to put the vehicle in the LLC name. I will contact the bank tomorrow and see how and if I can make that happen. I entered that exactly how you suggested and it couldn't have been more perfect. Thank you. I do have one last question. I had a couple of other charges I had put on the personal credit card before I got the business cards. I had $308.10 for LLC formation which, in my opinion, should be a business expense. Would I add those fee charges the same way except instead of entering them as an asset, just charge that as an expense in one of the expense categories. IE, a journal entry description (Secretary of The State), debit (EXPENSE) and credit (OWNER CONTRIBUTION).
I really don' think my personal credit card show be anywhere on here, that is why I believe just adding them as journal entries might be the way to go. There is a $5.00 bank fee for opening the first account at Navy Federal Credit Union but I don't really know if all that would be worth it.
PS. I really appreciate all the support. Veteran Pool Service and Repair LLC, as well as DL Properties LLC, are very thankful for you.
@TODavid69,
You are welcome. Yes, you would enter the same way via journal entry except, debit an expense as appropriate. So for filing fees that could go under Fees and Permits or Taxes - Other, something like that.
I assist taxpayers across the US with their accounting and tax needs. So if you looking for a pro, keep me in mind.