My business (LLC) just put a $2000 down payment on the purchase of another business. How exactly should this transaction look in terms of assets (cash will decrease, but what will increase? owners equity?)
It depends on the character of the business you are purchasing. First, is this an investment? Will it have its own QB file? How is the remainder of the purchase being handled? Is this down payment refundable if the deal doesn't go through?
A non refundable deposit on an investment is a cr to cash and a dr to fixed assets (investment A).
The purchase of the business that involves a down payment goes something like this.
dr Investment A (total price, including all costs)
cr Cash (cash payments made)
cr ST or LT Liability (balance due, depending on term of note)
