double entry for disposal of motor vehicle under hire purchase

Entries in Interest Account Depreciation Account and Profit Loss Account will be the same as have been passed under the first method. DR BS Motor Vehicles 7000.

All You Need To Know About Hire Purchase Agreement Ipleaders

You are required to prepare.

. Prerequisites You are acquiring a motor vehicle that costs RM17500000 with a 5-year hire purchase plan. April 28 2016 Bookkeeping. You should consult your accountant if you have doubt in.

Assuming you purchase a motor vehicle at S8000000 S8560000 with GST and you paid S1000000 as a down payment and take a loan for the remaining amount. I supply cars to car dealers. Total Interest charge base on 5 interest.

Since it was exchanged for fair value of 5000 and had a net book value of 6000 17000 11000 the loss on disposal must have been 1000. The interest rate per annum is 388 flat. To update hire purchase of motor vehicle.

The hire-vendor treats the hire purchase sale like an ordinary sale. For the purposes of this discussion we will assume that the asset being disposed of is a fixed asset. Double entry for disposal of motor vehicle under hire purchase.

Use the purchase invoice transaction to record the bill received from the car company for the vehicle purchased. Disposal on fixed assets refers to the write-off or sale of fixed assets and in some circumstances the assets are exchanged for new assets. Cash Price Method Under cash price method we are deal hire purchase transactions just like normal transactions.

When transactions or event happen we record them. Original cost 6349500 motor vehicles sale price 6060000 inc 1010000 vat acc dep 1269900 outstanding finance 5013113 hire purchase hp interest 145460 hp interest paid to us 1046887 currently in our revenue account unreconciled vat on the sale 1000000 i am really at a loss of how to do the sale. Initial payment 10000 30 3000 Total monthly payment 200 36 months 7200.

Double Entry for purchase of car Double Entry for purchase of car We have bought a car to be used as a company car by one of our directors. These are discarding sales or exchange. CR Disposal of Motor Vehicle Account.

Journal entry for disposal of motor vehicle under hire purchase Chapter 2 accounts of implementation of implementation of implementation of implementation of 1967 amendment and Islamic perspective 211 definition of purchase section 21 Law on the purchase of rental 1967. The double entry for this transaction will be. As we cannot reclaim the VAT on this is the double entry simply.

There are four methods of accounting for hire purchase. This typically occurs when the fixed assets are. Thus we can distinguish the disposals in 3 main ways.

Dr Fixed Assets Gross Value Cr Purchase Ledger Gross Value ie. DR Disposal Of Motor Vehicle Account. Motor Vehicle ABC XXXX cost RM 23844600 Insurance RM 784235 Loan from Bank RM 200000 Loan from Director RM 4128875 Deposit RM 5000 Hire Purchase Interest Suspense RM 3248000.

Asase Limited prepares accounts to 31 st December each year. Journal Entries in the books of Purchaser a For buying assets on hire purchase Asset on hire purchase account Dr. The interest rate per annum is 388 flat total hire purchase interest is RM1940000.

If the cash price was 7000 plus 1225 of VAT which was reclaimed as input tax the double entry is. CR BS HP Liabilities 7000. Hire Purchase double entry.

63900 x 35 month. Fixed Asset Trade In Journal Entry. If the total payments are only 8225 the HP company is not charging any interest.

Otherwise your double entry works ok As a matter of interest if youre paying 108333 per month and the interest rate is 5 you start owing 67267 and over 72 months the debt will be paid off The first years finance charge would be 313941. How to Record Hire Purchase Motor Vehicle. The monthly payment over 3 years is equal to 200.

Post full value to FAR and not separate VAT. You need to account for GST when you sell the motor vehicle even if you are not entitled to claim input tax for the purchase. Assuming you purchase a new Office Equipment at 20000 and financed it with a Hire Purchase plan.

Claiming Input Tax for Purchase Charging Output Tax for Sale FAQs. Motor vehicle disposal account for GT400. Thus we can distinguish the disposals in 3 main ways.

The journal entries for the illustration number 3 given above under this method will be as under. Fixed asset trade in double entry bookkeeping. The car costs 10000 and it requires to pay 30 initial payment and the remaining balance will be paid monthly with interest expense.

Use the Purchase Invoice transaction to record the bill received from the Car Company for the vehicle purchased. Amount Owing to Director Current Liabity Cr. The company depreciates its vehicles at the rate of 20 per annum using the straight line method on pro rata basis.

The double entry of this bill debits the Hire Purchase Current account and credit Accounts Payable or Bank account if Write Cheque is used instead of the Enter Bill transaction. Purchase and Sale of Motor Vehicles You may claim the GST incurred on the purchase of a motor vehicle if it is not disallowed under the GST law. 300000 100000 3 years.

There are additional entries needed for items that can be expenses immediately such as fees warranties and licenses. Provision for depreciation account. Call us today to see how we can help 832 915-1040.

A and company ABC have made the hire purchase agreement of the car. RM100000 x 388 x 5 years. The figures are as follows.

The discarding refers to the write off of the fixed assets. Extract of the profit and loss account. You have put down a deposit down payment of RM7500000 which means the financed amount is RM10000000.

The agreement that includes the assumption of goods and at the same time giving a. Assuming the transaction has commercial substance first we need to calculate the loss on disposal of the old motor vehicle. Get Help With Your Books We help businesses across the country with bookkeeping and taxes but we focus on providing bookkeeping in Houston Texas.

Accounting Basics Purchase Of Assets Accountingcoach