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Thread: How to capture HP on Pastel

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    Silver Member Christel's Avatar
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    Question How to capture HP on Pastel

    Hello - I see Lauren had the same question... I need to bring in the following by Journal:

    Bakkie sold for full settlement amount that was due on current HP. Need to pay over VAT.
    New bakkie (single cab) bought on HP. Need to claim VAT
    Motorbike (farming) bought on HP. Need to claim VAT

    I have the GL accounts: i.e. Installment sales / Vehicle @ Cost / Finance charges

    Thanks.

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    Platinum Member Neville Bailey's Avatar
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    Hi Christel,

    With regard to the bakkie that you sold, you should ideally process a tax invoice to the buyer, and allocate the proceeds to a GL account named "Profit / Loss on Sale of Assets" in your income statement, using VAT code 05. Then process the following general journal (with no VAT code):
    • Debit "Instalment Sales" with the settlement value
      Credit "Profit / Loss on Sale of Assets" with the settlement value
    • Debit "Accumulated Depreciation - Motor Vehicles" with the accumulated value of the depreciation of the bakkie
      Credit "Profit / Loss on Sale of Assets" with the accumulated value of the depreciation of the bakkie
    • Debit "Profit / Loss on Sale of Assets" with the original cost of the bakkie
      Credit "Motor Vehicles @ Cost" with the original cost of the bakkie


    With regard to the new acquisitions, process a general journal as follows:
    • The first line should credit "Instalment Sales" with the cost of the vehicle (and any VATable extras), using the VAT code 05 and debit "Motor Vehicles @ Cost" by using the contra amount column
    • The second line should credit "Instalment Sales" with the documentation fees, using the VAT code 01 and debit "Bank Charges" by using the contra amount column
    • The third line should credit "Instalment Sales" with any non-VATable charges (such as registration and licencing fees), using the VAT code 00 and debit "Motor Vehicles @ Cost" by using the contra amount column
    • The fourth line should credit "Instalment Sales" with the total finance charges payable, using the VAT code 00 and debit "Finance Charges in Advance" in the balance sheet by using the contra amount column
    Neville Bailey - Pastel Accounting Consultant and Photographer
    neville@accountingsoftwaresupport.co.za
    www.accountingsoftwaresupport.co.za
    View Neville Bailey Photography

    *** 20% DISCOUNT ON PASTEL XPRESS / PARTNER SOFTWARE UNTIL 15 DECEMBER 2017 ***

    "Give every person more in use value than you take from them in cash value."
    WALLACE WATTLES (1860-1911)

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    Silver Member Christel's Avatar
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    Hello Neville,
    Thank you so much... will try it out in the morning.

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    Hi Neville

    Brilliant - thanks. Just one more question if I may. How do I treat the monthly payments to the bank which have components of both capital and finance charge?

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    Platinum Member Neville Bailey's Avatar
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    Hi Connie,

    On a month to month basis, simply allocate the entire repayment to the installment sales creditor account.

    At year end, obtain an amortization schedule from the finance house, for the year past, which will split the capital and interest portions of the installments.

    Then process a journal to reallocate the interest portion to the income statement.
    Neville Bailey - Pastel Accounting Consultant and Photographer
    neville@accountingsoftwaresupport.co.za
    www.accountingsoftwaresupport.co.za
    View Neville Bailey Photography

    *** 20% DISCOUNT ON PASTEL XPRESS / PARTNER SOFTWARE UNTIL 15 DECEMBER 2017 ***

    "Give every person more in use value than you take from them in cash value."
    WALLACE WATTLES (1860-1911)

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    Connie K (14-May-13)

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    I really appreciate your help - thanks Neville!

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    Monthly payment split between capital and interest on Installment Sale agreements

    Good day Neville,

    Just one quick question on the VAT treatment in the monthly instalment payments, do you need to adjust the monthly payment with the vat allocation?

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    Platinum Member Neville Bailey's Avatar
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    Hi Abigail,

    If you claimed the VAT at the time of purchasing the asset, you cannot claim it again on the monthly instalments.

    I am surprised that the monthly instalments have a VAT component - are you assuming that, or does the documentation from the finance house indicate that?
    Neville Bailey - Pastel Accounting Consultant and Photographer
    neville@accountingsoftwaresupport.co.za
    www.accountingsoftwaresupport.co.za
    View Neville Bailey Photography

    *** 20% DISCOUNT ON PASTEL XPRESS / PARTNER SOFTWARE UNTIL 15 DECEMBER 2017 ***

    "Give every person more in use value than you take from them in cash value."
    WALLACE WATTLES (1860-1911)

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    Hi Neville,

    The total amount payable is R201 571.20 of which a VAT amount of R17109.62 is included in the total amount payable.

    We are going to claim the vat back on the purchase of the vehicles (car rental company). That is why I assume that the monthly instalments of R2799.60 (R201 571.20/72) should be reduced with the vat portion?

    What exactly should the journal entries be?

    Thank you
    Abigail

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    Platinum Member Neville Bailey's Avatar
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    Hi Abigail,

    The initial acquisition (including the VAT) must be processed as per my earlier post in this thread.

    The monthly instalments must be debited in full to the Instalment Sales account, thereby reducing the credit balance on that account. The monthly instalment does not have a VAT component, as it is effectively a loan repayment.
    Neville Bailey - Pastel Accounting Consultant and Photographer
    neville@accountingsoftwaresupport.co.za
    www.accountingsoftwaresupport.co.za
    View Neville Bailey Photography

    *** 20% DISCOUNT ON PASTEL XPRESS / PARTNER SOFTWARE UNTIL 15 DECEMBER 2017 ***

    "Give every person more in use value than you take from them in cash value."
    WALLACE WATTLES (1860-1911)

  13. Thank given for this post:

    Dave A (18-Oct-13), Emy (25-May-17)

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