Asset sell

I own a S Corp which consists of 3 restaurants. I sold one and paid the bank off for the other 2 with part of the money I received from the sale. How do I enter this in my chart of accounts.


__________________________________________________

Wow. This is a complicated question, and I'd need more information to answer it correctly.

You have several things going on here. You're selling a property and business. You're paying off loans. There's depreciation and book value to consider. There's loan payoff amounts and interest to consider.

There is no 'pat' answer to this question.

I can say in general terms, when you sell a business, you normally receive cash and pay off a loan, and also dispose of assets and a loan.

For example, you sell Joe's Restaurant for $40,000. And there's no loan on it.

You receive cash of $40,000.
You record the sale of assets - building, equipment, etc. - by crediting your asset accounts, debiting your Accumlated Depreciation accounts, (asset value less accumulated depreciation is called book value) and posting a Gain or a Loss on the Sale of said asset.

If there's a loan on that asset it gets trickier. There's more to consider, bank payoff amounts, interest paid, etc.

I think this topic is a good candidate for a new page on this site.

You didn't leave a name when you posted this question, but I hope this helps you a little.

There are tax consequences to exchanges of property, so when you have your taxes done, please have a knowledgeable CPA or tax consultant take a look at this for you.

If I can be of further assistance, let me know.

Thanks!

visit my page on loans for some more info on accounting for loans, too.

Click here to post comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Ask the Expert!.