Car owned by company given to employee

Ramesh Bhat

As you have mentioned that car is purchased by your company and it has been given to employee for their use. Further you have mentioned that your company is recovering amount of EMI (which is payable by your company to the financee company) from the employee as deduction in salary.

As you have booked the car in the books and charging depreciation on it, I would like to give suggetion to follow the following entries whie the transaction takes place in next month: -

At the time of Installment payment

Car Loan A/c                                 Dr.

Interest A/c                                    Dr.

    To Bank A/c

At the time of due of salary

Salary A/c                                     Dr.

    To Salary Payable A/c

    To Interest A/c

    To Car to Employee A/c

At the time of transfer of Car: -

Car to Employee A/c                     Dr.

     To Car A/c

I think this would help.