Hi,
Our company purchased a vehicle which was financed through Nedbank over a period of 7 years. I desperately need help on how to record this in Pastel.
Hi,
Our company purchased a vehicle which was financed through Nedbank over a period of 7 years. I desperately need help on how to record this in Pastel.
Hi, this is how our company does it with vehicles/equipment financed through Nedbank.
Nedbank will send an invoice, with the cost price price, the VAT and the total amount outstanding. In the contract, they will also list a handling fee (we treat it as an expense).
We do it via a journal entry
DR Vehicle/Asset account
DR VAT
DR Handling fee (on our contracts there are no VAT on this)
CT Nedbank Liability
I have also once done it via a normal invoice processing, then I just moved the balance in the supplier control account to a loan account, as it is a long term liability.
For the monthly payments, we debit the liability with each payment allocated from the bank
For the interest, we pass the following journal
DR Interest expense
CT Nedbank Liability
You can ask an amortisation schedule from the bank to account for the interest, or just perform one yourself.
I am not sure if the is the correct way, but our auditors are fine with it
Thank you, much appreciated.
Hi Elize
I think you are missing a transaction here. There should be an entry for finance charges for the term of the repayment. When you Credit Nedbank Liability the total value outstanding should be shown. You would normally create a deferred finance charges (Asset) account and debit the full value of the interest to that account. At the end of the financial year (or monthly if you wish), you reconcile they finance charges for the year, debit finance charge expense and credit the deferred finance charge asset account.
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