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CAR INSURANCE AND ROAD TAX

kuldeep satyadev (72 Points)

23 January 2019

Car purchased RS.4000000 insurance for car is 100000 and road tax permit is 500000
what's the journal entry

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ACA Sarita Laddha (Practicing CA) (1225 Points)
Replied 23 January 2019

first insurance paid will be capitalised as without insurance the asset cannot be ready to use

MOHAMMED IMRAN (1020 Points)
Replied 23 January 2019

1. car insurance a/c. Dr. 5,00,000
(or insurance co. )
to Bank a/c. 5,00,000

2. road tax a/c. Dr 1,00,000
(or RTO)
to Bank a/c. 1,00,000

3. car a/c. Dr. 46,00,000

to Bank a/c. 40,00,000
to car insurance. 1,00,000
to road tax. 5,00,000

2 Like

kuldeep satyadev (72 Points)
Replied 23 January 2019

if suppose that car has bought through the bank loan then what's the entry

1 Like

MOHAMMED IMRAN (1020 Points)
Replied 23 January 2019

for eg. if loan is taken from SBI
then one additional entry is required to passe

Bank a/c. Dr (loan amount)
to SBI (loan) a/c

2 Like

kuldeep satyadev (72 Points)
Replied 23 January 2019

how can I book car as a fi

MOHAMMED IMRAN (1020 Points)
Replied 23 January 2019

I don't get it please elaborate

1 Like

kuldeep satyadev (72 Points)
Replied 23 January 2019

I took bank loan for purchase of car and I'm running business and we are using this car for business purposes c
cost of car is RS 4000000 insurance charges 100000 Rto is 500000
can u tell the journal entries