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PDtax, CPA firm owner
Category: Financial Software
Satisfied Customers: 4022
Experience:  Have used almost every software package available.
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how do I set up the books for a company who finances their

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how do I set up the books for a company who finances their clients and has them setup on monthly payments - this company wants the books setup on a cash basis. Their clients make a down payment and they are set up on monthly payments which include interest.

PDtax :

Welcome to the site. I'm PDtax, and will be helping you today.

PDtax :

This works for businesses like buy here pay here car sales. For tax purposes, such businesses have to report the income on the sale when the vehicle is sold, not when the payments are made.

PDtax :

Can you confirm the kind of business?

PDtax :

I would set up the books to report a debit to account or note receivable and a credit to sales. Each customer could have their own note receivable account, such as Note receivable - Wilson.

PDtax :

when payment is received, debit cash, credit Note-Wilson until paid in full.


This is a time share company that get's people out of their time shares. The financing starts after a down payment. For example they charge 7000.00 receive a 2000.00 down payment and interest. They want to have a cash set of books.

PDtax :

so the books you want to assemble will show income as cash received. The entries will be similar:

PDtax :

If your business doesn't take title to the time share, but simply works as a middleman, then you would have a complex entry for your activity, as follows:

PDtax :

Sale to new timeshare buyer:

PDtax :

going to Q & A for entries...

Customer: replied 2 years ago.

Are you still there?

Hi Marlene,

first - to record the sale, let's say for $8,000, $2,000 down, and your firm gets to keep 25% of payments as your fee:

Cash 2,000
Note Receivable - Smith 6,000
Note payable - Jones (to Smith) 7,500
Revenue - Jones to Smith 500

Then, as payments are received, the notes accounts can be used to record the cash in and out. revenue is your percentage, all on the cash basis.
The next entry would show payment of 75% of the cash received to Jones:

Note payable - Jones (to Smith) 1500
Cash 1500

Your income statement will only show the cash retained as income, and the note receivable/payable pairs will keep track of balances due and payable.

Let me know if you need anything more. If this answers your question, positive feedback would be appreciated. I'm PDtax.
PDtax and 3 other Financial Software Specialists are ready to help you
Customer: replied 2 years ago.

Can I come back and ask you more questions after I set this up in QuickBooks.


Thanks for your help

Sure. try this out, then come back and ask any follow up you need.

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