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So I have purchased a few small capital assets and have charged them to our JD financial account only because they were interest free. I will pay them out as soon as the "free" term is up but both terms run over my year end. Should I set these short term items up as machinery loans or set up a new account for purchases like this?
Hi Karen,
If your JD Financial account operates as a line of credit that you can make purchases against without seeking additional financing approval then I'd just setup a new Credit Card type account and process the capital asset purchases against that. If instead, it operates as a traditional loan (once it's paid off, the credit no longer exists) then I'd put it under the Machinery Loans. Another option you could use would be to just process the purchases through Accounts Payable and set up JD Financial as a Supplier. Check with your accountant if you're not sure which method is best suited to your situation. If it were me making the entries, I'd probably go with the first option.