Enter a down payment to a vendor for a purchase

If you use accrual-based accounting, use these procedures to:

• Make a down payment for something you are going to buy
• Record when you apply the down payment for the purchase

Note: If you use cash-basis accounting, write a check to record the down payment and assign an expense account for the purchase.

Make a down payment

1. Write a check to enter the down payment to your vendor.
2. Enter all the information as you would a regular check.
3. For Account, enter the name of an account to track the down payment. When you create the account, make it an:
   • Other current asset account
   • Prepaid expenses detail type

Record when you use the money

1. Create a journal entry when you apply the down payment toward a purchase.
2. Debit the account where you track the down payment.
3. Credit the expense account for the purchase.