Buying and Selling Property Business in QuickBooks.

Question:

I buy and sell property. I cannot figure out how to set up the following scenario:

I contract to purchase a lot for $20,000 with a $1000.00 deposit and a 60 day close
& issue the $1000.00 check

During the 60 day close period, I contract to sell the lot for $25,000.00 to a different party.

The close on the purchase is the same date as the close on the sell - after signing the docs at the title co, I am effectively left with a $5000.00 profit less costs.

Is there a way to set this up on QuickBooks?

Answer:

The easiest thing to do in your situation is to record transactions as they happen. For instance, in the above scenario, the first thing that you would do is cut a check for the $1,000.00. You would post this amount to "Deposits", a current asset account.

During the holding period, and costs you would incur would be regular expense since you are in the trade of buying and selling property.

Now, I think that you have 2 choices.

1. Record the purchase and the sale separately. This is probably what I would do since I wouldn't think that you would always have a buyer before the purchase is closed. To do this, write a check for the purchase price of the property, including all costs (according to your HUD statement). If you don’t want to print this check, put "draft" in the check number field, and uncheck the "To be Printed" box. Then, record the land purchase in a cost of goods sold account named "Purchases", and classify the other expenses to their respective expense accounts. To record the sale, create an invoice for the sale amount using a non-inventory item that posts to the "Lot Sales" (or something similar) income account.

2. Your other option would be to summarize all the transactions in a journal entry. In the above example (After the check for the deposit had been written):

DEBIT
Purchases - 20,000
Cash - 6,000
CREDIT
Lot Sales Income - 25,000
Deposits - 1,000

You could either record the other expenses in the above journal entry or by check.