Purchase of car by proprietor

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Querist : Anonymous

Querist : Anonymous (Querist)

04 July 2013 A proprietor purchased a car by Paying rs.100,000 cash from His proprietorship firm as down payment . but availed of loan of Rs.300,000 from ICICI bank and paying it through his personal saving account. How it would be entered in books of accounts.

Asset Car A/c Dr.
To Cash A/c
To ...........Dr.

what should be dr along with cash because loan payment will be done through his personal saving account we can not show as loan here.

And what would be interest entry for the interest he paid during year on loan.

Please clarify in detail.

Ganeshbabu K

Ganeshbabu K (Expert)
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04 July 2013 1)ICICI car loan A/c Dr.
To Proprietor capital A/c

(being loan paid by proprietor adjusted to capital account)

if it is EMI loan pass JV to bifurcate principal and interest

if it is not EMI pass interest entry also as above adjusting to capital account

Thanks & regards
Ganesh babu k

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Querist : Anonymous

Querist : Anonymous (Querist)

04 July 2013 Thanks a lot, its EMI Loan and Interst is also there can you please tell me exact entry now. I have understood it but want to clear, if you please write one entry for examble

Ganeshbabu K

Ganeshbabu K (Expert)
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04 July 2013 pass above entry for full EMI paid

and then you can charge interest as below

Dr. Interest on car loan A/c
Cr. To ICICI car loan

(being interest paid in EMI charged to profit and loss account)

Thanks & regards
Ganesh babu k

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