Buying second hand Vehicle from Director - Journals

[mango]

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

[Andromeda]

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.

[mango]

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?

[Andromeda]

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.

[msmoorad]

i did not want to start a new thread to ask my question & ive chosen this thread bcos it seems to be somewhat related.

will a bank finance a second hand vehicle- lets say the vehicle is almost 10 yrs old- a Nissan 1400 bakkie 2008 model?
its being sold for R45 000 at a used car dealer.