Can anyone take a look at what I have done and let me know if I am on the right track.
Situation getting ready for year end.
Beginning of fiscal year I got a loan from the bank to purchase a utility trailer for $15,000. I then set up a fixed asset account for $15,000 including sub account for accumulated depreciation and an account for depreciation expense. I then set up a Long term liability account for the amount of the bank loan $15,000.
Ok when I go to enter a payment on the loan I go to write cheques and credit the long term liability account for the trailer I then go and write another cheque to record the interest expense.
I also credited the accumulated depreciation for past year $2,250 and debited depreciation expense $2,250
So far I want to know if I have done this correct.
Finally, would someone please explain the effects could someone explain the effects of this transaction on the balance sheet and the profit and loss statement. For example is there any affect on the P & L sheet due to the loan payments I made the past many months?
Thanks,
John