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Thread: Vehicle bought on HP

  1. #1
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    Vehicle bought on HP

    Good Day ,

    Please could I have assistance with the following

    My company purchased a vehicle on Credit with accessories and a discount how do I journalize this entry on Pastel

    Does the accessories to vehicle also go into the Asset account or is it captured else were

    Thank you

  2. #2
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    Hi Thiru,
    Assume no deposit is paid:
    Credit the HP Long Term Liability with the total amount financed.
    Debit VAT on Capex purchases with the VAT reflected in the sale agreement
    Debit Motor Vehicles at cost with the balance (there can be initiation fees and other other bank charges, but you may capitalise them, including accessories)

    The monthly payments you debit to the long term liability account.

    Either monthly or annually you Debit the finance charges in the Income Statement and Credit the long term liability account.

    I have assumed it is a delivery type vehicle. If it is a passenger vehicle then there is no VAT entry.
    Last edited by Andromeda; 01-Dec-20 at 11:13 AM. Reason: Addition:

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    Thank you so much,this helped me alot

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