I would like to run something by everyone here in hopes of confirmation or correction...
I took out a loan for a vehicle in July of 2005. The loan was for $10,000. I did the following to set up the loan:
-created a Fixed Asset account for the truck and debited the amount of the loan (10K)
-created a Fixed Asset sub-account for accumulated depreciation
-created an Expense account for Depreciation
-created a Long Term Liability for the loan and credited it the amount of the loan
When I pay the loan each month I write a check for the payment amount and in the expenses tab, I use the long term liability account.
(this is where I want to check my procedures)
At the end of the year I plan to do the following:
-use the register for the Accum. Dep. account to debit the account
-make a general journal entry to credit the Long Term Liability account the amount of interest I paid on the loan for the year and debit the Interest Expense expense account.
As near as I can figure, this should bring all of my accounts up to date and make uncle sam happy. Have I missed anything and/or does this all seem reasonable?
Thanks to all.