A loan that I had on my business truck was sold to another financial company. How do I record this change? I am assuming that I can't just change the old name to the new name?!?
- posted
13 years ago
A loan that I had on my business truck was sold to another financial company. How do I record this change? I am assuming that I can't just change the old name to the new name?!?
I'm not sure, but when this happened to me I just left the vendor ID the same and changed the Vendor Name and Address to the new information.
(My Vendor ID for GTE started out years ago as General Telephone, morphed into Verizon and is now Frontier, all using the same GTE vendor ID. )
Carla
Don't be irreplaceable. If you can't be replaced, you can't be promoted.
That would be fine unless you still had debts and payables to that vendor/lender.
You may want to set up a new vendor to pay the bill to. That way you have the history to the old vendor and the history to the new vendor.
To close out the old loan:
Create a journal entry, debit Accounts Payable (old vendor), credit Other Income.
To start the new loan:
Create a journal entry, debit Other Income, credit Accounts Payable (new vendor).
That would work if the loan was recorded in A/P which most loans are not. I also would not use an Income account as the offset. Use a bank type Clearing or Suspense account.
A loan should be set up as a Long Term Liability account--NOT an A/P entry.
It does not matter who holds the note on the truck so when the loan changed hands all that needs to be done is to switch Vendors when making payments.
Please note that it was the OP who set it up that way, not I. And given his apparent accounting background, I'd say it was probably the best method for him.
BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.