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Posted by Ken on February 5, 2007, 7:56 pm
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Greetings
Ouch, this looked so simple. Deposit is/should only be used to record such
as
refundable; plan deposit, bottle or pallet which are refundable. In the
instance where additional information is being awaited the deposit account
can be used but it behaves like an escrow account.
The first suggestion >
> dr. Fixed Assets - Land 50,000
> dr. Fixed Assets - Building 200,000
> cr. Mortgage Payable 150,000
> cr. Cash 100,000
Where cash is the down payment, correctly removes cash from an account and
allows the purchased asset to enter at full purchase amount. Note the asset
total ends up equal to the cash and financing.
>
>> Merkan,
>>
>> I would think that this simplified journal entry accounts for your
>> down payment:
>>
>> dr. Fixed Assets - Land 50,000
>> dr. Fixed Assets - Building 200,000
>> cr. Mortgage Payable 150,000
>> cr. Cash
>> 100,000
>>
>> What am I missing?
>
> The correct journal entry.
>
> Dr. Deposits/down payments xxxxxxxx
> Cr. Cash xxxxxxxxxx
>
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