Purchase car

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This query is : Resolved

Gurvinder Singh (Querist)

22 September 2014 Kind Attn : Dear Sir/Mam

Pls help me to solve my below query.

Our Co purchased a Car. Pls show the respective entries related to Total Car Amount; Down payment (part payment), loan from Bank; Interest on loan; Processing fee.

It would be of great help if you can show me the respective entries Dr and Cr wise, with indicating the main and sub head of accounts for creditor and general ledger a/cs.

Also, is the interest for a year needs to be entered as a single amount or month-wise.

Thanks and regards
Gurvinder

CA Devanand Jethanandani

CA Devanand Jethanandani (Expert)

22 September 2014 Entries,

Down payment,
Car A/c. Dr.XXX
To Bank Cr. XXX

when loan disbursed,
Car A/c. Dr.XXX
To Lending Bank Cr.

Loan processing fees,
Bank charges Dr.XXX
To bank a/c. Cr.XXX

When installment due and paid (monthly installment entry)
Lending Bank Dr.XXX
Interest expense Dr.XXX
To bank a/c. Cr.

Head of accounts,
Car A/c. under Fixed Assets
Interest expenses under indirect exp. (in balance sheet under finance charges)
Lending bank under secured loans.
Bank charges under indirect exp. (in balance sheet under finance charges)

Pass interest entry on monthly basis, you will receive statement of monthly installments (bifurcation into principal and interest) based on which book entries.

Thanks.

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