What your business owns is what the assets are. By using resources, businesses produce revenue and economic benefits. When you sell any of your business assets, you should record it in your QuickBooks account for making your report accurate. Here, we will help you to understand how to record the sale of an asset in QuickBooks. Let’s read ahead and find out the information.
With this guide, we will help you to understand QuickBooks assets and how to record the sale of an asset in QuickBooks including the Fixed Assets.
Brief Introduction to Assets in QuickBooks
Assets are basically the resources that your business owns for producing revenue or economic benefits in the future. There are other components of the balance sheet such as Liabilities and Equity. GAAP (Generally Accepted Accounting Principles) requires businesses to separate the liabilities and assets into current assets and the non-current assets categories.
To be precise, let’s know more about current and non-current assets categories in QuickBooks:
Current Assets: It covers cash and the assets that can be converted into liquid cash within 12 months. It has other components such as Cash equivalents, Accounts receivable, Inventory, Prepaid expense, Investments, Notes Receivable
Non-Current Assets: Businesses can also own intangible assets and fixed assets. Such accounts are also called long-term assets.
These assets can be recorded in your QuickBooks account. If you have no clue how to record sale of asset in QuickBooks, we will enlighten you in further discussion.
How to Record Asset Sale in QuickBooks?
Businesses can make plans to sell the asset. Whenever you do so, you convert the asset into cash. Keeping a record of such transactions is necessary as they help you to create accurate reports in QuickBooks. If you require to record any kind of commission on a sale of an asset, QuickBooks allows you to do that as well. However, you have to choose the relevant taxes.
To learn how to record a sale of an asset in QuickBooks, one has to carry out the following steps:
- First of all, you have to check if the depreciation is applicable to your product. If so, you need to calculate it.
- Then, debit the accumulated depreciation which can be done through the journal entry.
- Now, credit the specific amount for an asset that has been sold.
- The cash amount you have received after selling the asset, you need to debit this amount.
- Once done, you need to credit your profit or loss for the asset sale. If required, you can generate the Profit and Loss income account so that you can record it.
Create Sales Commissions
If you require to generate a sales commission then you just have to create the Services and mention that you sell this product or service to your customers. For step by step, you can go through the following steps:
- Click on the “Settings” menu.
- Then, choose the “Products and Services” option.
- After this, click on the “Services” button.
- At this point, you need to select the “I sell this product or service to my customers” checkbox.
- Now, enter the required information.
- Press the “Save and Close” button.
When you are done creating a service item, you can use this on the sales receipt when you record the commission on a sale of an asset.
How to Record Sale of Fixed Asset in QuickBooks?
Fixed assets include vehicles and loan liabilities. When you plan to see the vehicle owned by the company, it decreases the Fixed Assets. If you want to record a journal entry for this sale, you can continue following these steps:
- Click on the “Company” menu.
- Then, select the “Make General Journal Entries” option.
- Now, move to the “Account” column and add your bank account for which you wish to record the vehicle sale.
- In the “Debit” column and enter the amount.
- Moving ahead to the second line, enter the “Depreciation Expense”. After that, specify the difference between your actual Fixed Asset amount subtracting the selling price of the company vehicle in the column of “Amount”.
- Once done, go to the third line and add the “Fixed Asset” (vehicle).
- Now, enter the amount in the “Credit” column.
After you record the sale, you can write the check later for the remaining loan payable amount. Now you have learned the entire process of recording the fixed sale in QuickBooks.
Final Verdict
Recording the sale of the assets is essential in QuickBooks. This helps you to create accurate reports. We have shared how to record the sale of an asset in QuickBooks in a simple manner. Besides that, we have taught you to record fixed assets (vehicle) and sales commissions in QuickBooks.
For adding other essential data in QuickBooks such as sales receipts and cash sales, you can go through the following guides: