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Deposits on New construction

Asked Sep 25, 2007, 09:55 PM — 1 Answer
I am purchasing a rental property that is not yet built. The builder is requiring 5k down, then an additional 5k 60 days before completion. I wrote a check to the builder for the initial 5k. How do I enter that in quickbooks? It is not an expense is it? I believe that it would be a long term liability, either due to owner, or listed under the property name? I am not sure how to enter the check. Please help?

TK

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CaptainForest Posts: 3,684, Reputation: 2085
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#2

Sep 26, 2007, 04:49 PM
It is NOT a liability as far as YOU are concerned. It is for the builder, but you aren’t the builder.

Dr. Some Type of Prepaid Account (an asset account) 5,000
Cr. Cash 5,000
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