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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16544
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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How would i record a note purchase in quickbooks? I am purchasing

This answer was rated:

How would i record a note purchase in quickbooks? I am purchasing at a discount so i need to show:
Purchase Price (expense I guess or fixed asset???)
Discount (what type of account?)
Account Receivable (entire amount)

Megan C :

Thank you for your question, my name is XXXXX XXXXX I will be happy to help you today

Customer:

great, thanks Megan

Customer:

how would we show this in qb?

Megan C :

Okay Now you would have a note receivable for the full face value of the note

Megan C :

then you would have a discount which is a contra asset account

Megan C :

Then the third piece is the cash that you paid out

Megan C :

So you would debit note receivable, and credit discount on notes receivable for the discount, and credit cash for your purchase price

Megan C :

The discount is amortized over time

Customer:

Discount = contra asset account?

Customer:

what does that mean?

Customer:

that is not an option

Customer:

or do i put like a negetive fixed asset or something weird?

Megan C :

It would be a negative account receivable

Megan C :

It's just got a credit balance.

Customer:

does qb allow two differnt ar in one transactions?

Customer:

transaction*

Megan C :

I don't know anything technical about QB, I just know how to record the transaction properly under accounting rules.

Customer:

ok

Megan C :

Is there anything else I can assist you with today?

Customer:

i am checking it

Customer:

so to clarify

Megan C :

okay

Customer:

Note Receivable - AR (full amount due)
Discount - (Negetive) AR (discount amount)
Cash - Cash (after discount or actual amount paid)

Megan C :

That is correct

Megan C :

Once I have answered your questions, please don't forget to rate positively so that I may receive credit for assisting you today

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