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Thread: Buying second hand Vehicle from Director - Journals

  1. #1
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    Unhappy Buying second hand Vehicle from Director - Journals

    Hello everyone,

    Our company's Director wants to sell his single cab bakkie, the business wants to but it from him. The market value is R 200 000 so well buy it for that amount.
    The Bakkie is still under finance from Std bank with outstanding amount to be R 138 000.00 as it stands now.

    The Director owes money on his "loan account also"...so my question is what would be the correct way to record this transaction?

    Dr Vehicles @Cost R 200 000.00
    Cr Peter (supplier) R 200 000.00 (I take it I need to set the Director up as a supplier)


    Dr Peter (supplier) R 138 000.00 (this is when settlement takes place with Std bank)
    Cr Bank R 138 000.00


    Dr Peter (supplier) R 62 000.00 (the balance owing to offset against his Loan account)
    Cr Peter Loan R 62 000.00


    Please could someone tell me if this is correct ? I don't want to make a mistake with this....lol

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    Provided Peter is the director then yes, that seems correct. However I would in the 1st entry credit his loan and in the 2nd entry debit his loan. Then 3 is unnecessary and the whole thing is more correct (the director is not a supplier).

    If the company is vat registered then complete a VAT264 so that the company can claim the R24,561 included in the price.

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    mango (24-Apr-17)

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    Thank you ...it makes sense to only do the 2 journals...

    Could you please tell me why we would be able to claim VAT on this? This is in the directors personal name and the business buying is indeed VAT registered?

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    Hi Mango

    Because the non-vendor, in this case the director, paid input VAT; in other words the price to the company includes VAT. As longs as the vehicle concerned is not classed aa a passenger vehicle.

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