JOURNAL ENTRY FOR REIMBURSEMENT FROM COMPANY FOR ASSET PURCHASED
This query is : Resolved
25 May 2023
I PURCHASED 2 ASSET
1) ASSET 1 ( CHAIR ) FOR WHICH PAYMENT WAS MADE BY ME USING CREDIT CARD RS.13000/- PLUS INT RS.2000/- ASSET IS USED BY ME IN MY BUSINESS
2) ASSET 2 ( TABLE ) FOR WHICH PAYMENT IS MADE BY ME USING CREDIT CARD RS. 20000/- PLUS INT RS. 5000/- BUT THE ASSET IS USED BY SOMEONE ELSE
FOR BOTH THE ASSET I GOT REIMBURSEMENT FROM MY COMPANY RS.33000/-
WHAT WILL BE JOURNAL ENTRY FOR THIS IN MY BOOKS
1) ASSET 1 ( CHAIR ) FOR WHICH PAYMENT WAS MADE BY ME USING CREDIT CARD RS.13000/- PLUS INT RS.2000/- ASSET IS USED BY ME IN MY BUSINESS
2) ASSET 2 ( TABLE ) FOR WHICH PAYMENT IS MADE BY ME USING CREDIT CARD RS. 20000/- PLUS INT RS. 5000/- BUT THE ASSET IS USED BY SOMEONE ELSE
FOR BOTH THE ASSET I GOT REIMBURSEMENT FROM MY COMPANY RS.33000/-
WHAT WILL BE JOURNAL ENTRY FOR THIS IN MY BOOKS
09 July 2024
Here's how you can record the journal entries for the purchase and reimbursement of both assets in your books:
**For Asset 1 (Chair):**
1. **Purchase of Asset using Credit Card:**
- Debit: Asset 1 (Chair) - Rs. 13,000
- Debit: Interest Expense (assuming it's a part of the cost) - Rs. 2,000
- Credit: Credit Card Payable - Rs. 15,000
2. **Reimbursement from Company:**
- Debit: Credit Card Payable - Rs. 15,000
- Credit: Reimbursement Income (or Cash/Bank, depending on how you received the reimbursement) - Rs. 15,000
**Journal Entry for Asset 1:**
- Debit: Asset 1 (Chair) - Rs. 13,000
- Debit: Interest Expense - Rs. 2,000
- Credit: Credit Card Payable - Rs. 15,000
- Debit: Credit Card Payable - Rs. 15,000
- Credit: Reimbursement Income (or Bank/Cash) - Rs. 15,000
**For Asset 2 (Table):**
1. **Purchase of Asset using Credit Card:**
- Debit: Asset 2 (Table) - Rs. 20,000
- Debit: Interest Expense (assuming it's a part of the cost) - Rs. 5,000
- Credit: Credit Card Payable - Rs. 25,000
2. **Reimbursement from Company:**
- Debit: Credit Card Payable - Rs. 25,000
- Credit: Reimbursement Income (or Cash/Bank, depending on how you received the reimbursement) - Rs. 25,000
**Journal Entry for Asset 2:**
- Debit: Asset 2 (Table) - Rs. 20,000
- Debit: Interest Expense - Rs. 5,000
- Credit: Credit Card Payable - Rs. 25,000
- Debit: Credit Card Payable - Rs. 25,000
- Credit: Reimbursement Income (or Bank/Cash) - Rs. 25,000
**Explanation:**
- **Purchase of Assets:** When you purchased each asset using your credit card, you debit the respective asset account for its cost and also include any interest paid as part of the cost of acquiring the asset. The credit goes to your credit card payable account, representing the liability to your credit card company.
- **Reimbursement from Company:** When you receive reimbursement from your company, you reverse the credit card payable entry by debiting it and credit an income account (or bank/cash if the reimbursement is in cash). This effectively reduces your liability on the credit card and records the reimbursement as income or cash inflow.
Ensure to classify the interest expense correctly as part of the cost of the assets if it relates directly to their acquisition. Adjustments may be necessary based on specific accounting policies and practices followed by your company.
**For Asset 1 (Chair):**
1. **Purchase of Asset using Credit Card:**
- Debit: Asset 1 (Chair) - Rs. 13,000
- Debit: Interest Expense (assuming it's a part of the cost) - Rs. 2,000
- Credit: Credit Card Payable - Rs. 15,000
2. **Reimbursement from Company:**
- Debit: Credit Card Payable - Rs. 15,000
- Credit: Reimbursement Income (or Cash/Bank, depending on how you received the reimbursement) - Rs. 15,000
**Journal Entry for Asset 1:**
- Debit: Asset 1 (Chair) - Rs. 13,000
- Debit: Interest Expense - Rs. 2,000
- Credit: Credit Card Payable - Rs. 15,000
- Debit: Credit Card Payable - Rs. 15,000
- Credit: Reimbursement Income (or Bank/Cash) - Rs. 15,000
**For Asset 2 (Table):**
1. **Purchase of Asset using Credit Card:**
- Debit: Asset 2 (Table) - Rs. 20,000
- Debit: Interest Expense (assuming it's a part of the cost) - Rs. 5,000
- Credit: Credit Card Payable - Rs. 25,000
2. **Reimbursement from Company:**
- Debit: Credit Card Payable - Rs. 25,000
- Credit: Reimbursement Income (or Cash/Bank, depending on how you received the reimbursement) - Rs. 25,000
**Journal Entry for Asset 2:**
- Debit: Asset 2 (Table) - Rs. 20,000
- Debit: Interest Expense - Rs. 5,000
- Credit: Credit Card Payable - Rs. 25,000
- Debit: Credit Card Payable - Rs. 25,000
- Credit: Reimbursement Income (or Bank/Cash) - Rs. 25,000
**Explanation:**
- **Purchase of Assets:** When you purchased each asset using your credit card, you debit the respective asset account for its cost and also include any interest paid as part of the cost of acquiring the asset. The credit goes to your credit card payable account, representing the liability to your credit card company.
- **Reimbursement from Company:** When you receive reimbursement from your company, you reverse the credit card payable entry by debiting it and credit an income account (or bank/cash if the reimbursement is in cash). This effectively reduces your liability on the credit card and records the reimbursement as income or cash inflow.
Ensure to classify the interest expense correctly as part of the cost of the assets if it relates directly to their acquisition. Adjustments may be necessary based on specific accounting policies and practices followed by your company.
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