How to record building purchase?

HeatherBHeatherB Member Posts: 6

Hi, I purchased a building in 2020 to start a little business. The purchase price was $45,000. I borrowed $36,000 from a bank and paid the balance (down payment) with my personal equity.

I worked with a Wave coach and he entered the following journal entry to record the purchase:
1) $45,000 debit to an asset account (Property, Plant & Equipment)
2) $36,000 credit to a liability account for the money i borrowed from the bank
3) $9,000 credit to an equity account for the cash i put as down payment

Now in reality, I paid:
4) $500 earnest money to the seller before closing
5) $9,941.70 at the time of closing (includes $8,500 for down payment + closing costs)
6) $247.70 towards the first month's mortgage payment
7) $35,990.84 to close out this loan the next month

For a total of $46,680.24.

Since i paid $35,990.84 out of my business account that is connected to Wave (my husband pumped $40k into it before that) that shows up as a separate withdrawal transaction. But the other payments (4 thru 6) were paid out of my husband's personal account and there are no entries for them on my book.

How should i capture the actual payments so my books are accurate and i can take advantage for taxes?

Thank you in advance!

~ Heather

edited April 1, 2021 in Using Wave

Comments

  • JulianPJulianP Administrator Posts: 1,002 admin

    Hey @HeatherB !

    Hmm. This ones a bit tricky. When it comes to bookkeeping your husbands personal funds for this case, you can use the workflow outlined in this Help Center article. Essentially you'll want to record your husbands personal funds deposit into your business as "Owner Investment/Drawings" since this would be considered an investment into the business. However, due to the complexity of your case, I suggest reaching back out to your Wave Advisor for further assistance or contacting a professional CPA as we at Wave Support are not accountants. They will be able to provide you with the best assistance to ensure your books are accurate and so you can take advantage of your taxes.

    edited April 12, 2021
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