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  #1  
Old 05-21-2012, 09:14 PM
bell.79 bell.79 is offline
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Entering New Car Purchase

Ok my partner runs his own business and just recently purchased a Combo van for the business.
My problem starts with how to enter it all in as he used his old car as trade in for part payment, this car was not owned by the business.

So he paid $24,000 for the van
Less trade in of $14,000
Got finance for $10,000
Plus interest charges of $3000

I have tried working out what to d but as i am only new to all this it has started to do my head in.

Thanks in advance
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  #2  
Old 05-22-2012, 09:07 AM
Deidre56 Deidre56 is offline
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did he borrow then the $13,000? The 10K plus the 3K?
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  #3  
Old 05-22-2012, 06:04 PM
bell.79 bell.79 is offline
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He got the $14,000 for the trade in of the old car
the $10,000 is the loan and
the $3,000 is the interest on the loan
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  #4  
Old 05-23-2012, 08:41 AM
Deidre56 Deidre56 is offline
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Debit Credit
Vehicles(fixed asset) 27,000.00
Loan (Long Term Liab) 13,000.00
Owners Equity 14,000.00

Do a journal entry to book the new auto purchase.
When payments are made on the loan, code them to the liability you set up.
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  #5  
Old 06-01-2012, 10:47 PM
bell.79 bell.79 is offline
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Thank you
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  #6  
Old 06-02-2012, 01:22 AM
dammyboy dammyboy is offline
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A couple of things, it seems the van cost $24k whereas Deidre55's suggested solution gives you a van costing $27k in the balance sheet. The interest will presumably be paid over the life of the loan and I think should be expensed annually, not capitalised in the cost of the van. Also there is no mention of GST - as this is Aust forum I assume the $24k includes GST (private no GST sales don't tend to have trade-ins).

I would suggest as follows (but depends on the facts re interest, loan repayments and GST etc)

Dr Vehicles (Fixed Assets) 21818.18
Dr GST Paid 2181.82
Cr Loan Inc Int (long term liability) 13000.00
Dr Unexpired Int (negative long term liability) 3000.00
Cr Owners Equity 14000.00


The Loan Inc Int and the negative liability gives a net loan of $10k, which is all that is owing at present.

As repayments are made:

Dr Loan Inc Int xxx
Cr Bank Account xxx

At end of each year, calculate and expense annual interest:

Dr Interest Expense xxx
Cr Unexpired Interest xxx

At the end of the loan the Loan Inc Int and Unexpired Interest accounts will both be nil.
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  #7  
Old 06-03-2012, 10:41 PM
bell.79 bell.79 is offline
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Ok thanks, that makes sense.

My next problem is when i try to enter the van i put in the price a quickbooks has a different gst amount to what the invoice has.
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  #8  
Old 06-04-2012, 01:12 AM
dammyboy dammyboy is offline
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QuickBooks will calculate GST as 1/11th of the GST inclusive purchase price. Usually because of rego, stamp duty or insurance, GST is not 1/11th. One way to deal with this is to enter 2 amounts for the vehicle. Note however that rego and/ or insurance should not be included in the Fixed Asset amt and should be expensed instead.

Say rego was $300 (inc $25 GST), stamp duty was $700 (no GST) and $23000 was for the vehicle (inc $2090.90 GST).

$300 (inc GST) should be expensed as registration costs and $23700 (inc $2090.90 GST) as a Fixed Asset. The $23700 should be entered as 2 amounts, $23000 (that is the GST amt * 11) as subject to GST and $700 as "no GST".

Hope this makes sense.
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  #9  
Old 06-04-2012, 08:40 AM
Deidre56 Deidre56 is offline
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you break out interest with each payment when paid each month. you dont book it annually. you certainly dont book a negative liability for it.
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  #10  
Old 06-07-2012, 02:44 AM
eric9090 eric9090 is offline
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Accounts

Interest payment is the Liability and 10k Loan is also a liability, sale proceeds comes under settlements and purchase will be debited in fixed assets with a credit entry of 14k in sales proceeds, 10k in borrowing and 3k as current liability.
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  #11  
Old 06-11-2012, 08:54 PM
bell.79 bell.79 is offline
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Thanks for all the advice

Next question? Who would like to come do quickbooks for me lol
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  #12  
Old 06-21-2012, 12:28 AM
eric9090 eric9090 is offline
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Quickbooks

Nobody wants to go for quickbooks for FREE!
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  #13  
Old 06-24-2012, 06:52 PM
bell.79 bell.79 is offline
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I hear you on that one, i hate it and would rather poke my eyes with hot needles at the moment
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  #14  
Old 06-25-2012, 11:03 PM
eric9090 eric9090 is offline
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Qb

Quick books are slight tricky but would be a good friend once properly understood, but someone wants to get it done by others and other wants to go for needling eyes rather than QB :P
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