How to record a vehicle lease in quickbooks

Written by kate bluest
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How to record a vehicle lease in quickbooks
Now that you have received your vehicle lease, you must properly record it in QuickBooks. (Jupiterimages/Photos.com/Getty Images)

Recording a vehicle lease in QuickBooks includes accounting for the total liability incurred through the lease and recording the monthly payments and interest expense. Set up your accounts, record a general journal entry and your monthly payments. If your company already owns a vehicle, you may already have a "Vehicles" fixed asset account. It is also likely that you already have an "Interest" expense account. Check the "Chart of Accounts" for these accounts before creating new ones. You will need to add a liability account for the lease.

Skill level:
Moderate

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Instructions

    Set Up Accounts

  1. 1

    Open QuickBooks and hold down the "Ctrl" key and press "A" to open the "Chart of Accounts" window. Hold down the "Ctrl" key and press "N" to open the "Add New Account" dialogue window.

  2. 2

    Select the appropriate button to set up the account you want in the "Add New Account: Choose Account Type" window. The account types that you will need to record a lease are "Expense" (interest), "Fixed Asset" (vehicle) and "Liability" (lease). To select a liability account, select the "Other Account Types" radio button and click the arrow. Select "Long Term Liability" if the lease is over a year. Select "Other Current Liability" if the lease is a year or less. The instructions that follow are the same no matter which account type you choose.

  3. 3

    Click the "Continue" button to go to the "Add New Account" window. Enter an "Account Name," "Description," "Account No." and "Tax-Line Mapping." A common way to name the liability account is "Lease -- Vehicles (type of vehicle)." Name the account according to your own preferences or the norms in your "Chart of Accounts."

  4. 4

    Click the "Enter Opening Balance" button in the "Add Account" window to open the "Enter Opening Balance" dialogue box. Enter an opening balance if the account had an open balance before your QuickBooks start date. If not, enter the starting balance in the "General Journal Entry." Click the "OK" button to save the settings and return to the "Add New Account" window. Click the "Save and Close" button to save the account and return to the Chart of Accounts.

    General Journal Entry

  1. 1

    Click "Company" in the top menu and select "Make General Journal Entries" to open the "Make General Journal Entries" window.

  2. 2

    Enter the "Vehicles" fixed asset account in the "Account" column in the "Make General Journal Entries" window. Enter the total amount of the lease, excluding the interest in the "Debit" column on the same line. Go down to the next line.

  3. 3

    Enter the "Lease" liability account in the "Account" column in the "Make General Journal Entries" window. Enter the total amount of the lease, excluding the interest in the "Credit" column on the same line.

  4. 4

    Click the "Save & Close" button in the "Make General Journal Entries" window to save the transaction and close the "Make General Journal Entries" window.

    Record Monthly or Quarterly Payment

  1. 1

    Click "Vendor" in the top menu and select "Enter Bills" to open the "Enter Bills" window.

  2. 2

    Enter the name of the leasing company on the "Vendor" line. Click the "Tab" key. If the cursor moves to the "Date" field, skip the next step. If the "Vendor Not Found" dialogue box appears, this means the vendor is not in your vendor list. Go to the next step.

  3. 3

    Click the "Set Up" button in the "Vendor Not Found" dialogue box to open the "New Vendor" dialogue box. Fill out the contact information for the vendor, click the "OK" button to save the information and return to the "Enter Bills" window. Click the "Tab" key to move to the "Date" field.

  4. 4

    Enter the invoice "Date," "Ref. No.," "Amount Due," "Terms," "Bill Due" and "Memo" fields. Tab between fields.

  5. 5

    Click the "Expenses" tab in the "Enter Bills" window. Enter the "Lease" liability account in the "Account" column. Enter the amount of the payment that is going toward the lease balance in the "Amount" column. Go to the next line.

  6. 6

    Enter the "Interest" expense account in the "Account" column on the "Expenses" tab in the "Enter Bills" window. Enter the interest amount in the "Amount" column. Interest and principle are listed separately on your bill. If they are not, ask your accountant how to enter the transaction. Click "Save & Close" to record the transaction.

Tips and warnings

  • If you are unsure about how to set up or name the accounts, speak to your accountant.

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