Double Entry For Hire Purchase Of Motor Vehicle Malaysia

If the cash price was 7 000 plus 1 225 of vat which was reclaimed as input tax the double entry is. Transfer to hire purchase creditor account. This matches the cost to purchase the van to the income associated with the expense.

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Topic 2 Hire Purchase

Net of the interests and state the liability to the hire purchase company in full i e.

Double entry for hire purchase of motor vehicle malaysia. Hp double entry it s unusual imo to do it through creditors. The purchase was on hire purchase basis rs 50 000 being paid on the signing of the contract and thereafter rs 50 000 being paid annually on 31st march for three years interest was charged at 15 per annum. Credit hire purchase company. How do you record the disposal of fixed assets in the following situations.

The double entry of this bill debits the hire purchase current account and credit accounts payable or bank account if write cheque is used instead of the enter bill transaction. But in book keeping we need to capitalise the asset at cost i e. Debit interest suspense balance sheet current liability type. This in itself is straight forward.

In this case the monthly repayment bill shows only the hire purchase current account of 320 00. To accomplish this we need to make an entry to account for depreciation. Debit contra bank account balance sheet bank account type. However i would say you need to reconcile that creditor account very carefully.

A business has fixed assets that originally cost 9 000 which have been depreciated by 6 000 to the date of disposal. Vehicles are usually afforded a five year life. If the total payments are only 8 225 the hp company is not charging any interest. A motor van on 1st april 2009 the cash price being rs 1 64 000.

If however there is a creditor set up for the hp agreement then you need to post invoices for the interest payable each month which will db hp interest and cr creditors. Cr b s hp liabilities 7 000. Disposal of fixed assets double entry example. The double entry will be.

The accounting rules require us to record the cost to purchase the van over its useful life. Recording of the liability to the hire purchase company. The fixed assets were scrapped and written off as having no value. Purchased from maruti udyog ltd.

Delhi tourist service ltd. Next pass a journal to transfer the amount from contra bank account to your hire purchase creditor account. Dr b s motor vehicles 7 000. The new motor vehicle 30 000 is brought into the business and the business makes a loss 1 000 on disposal of the old vehicle.

Credit the old vehicle 17 000 11 000 and the cash 25 000 leave the business and are used to pay for the new motor vehicle. The fixed assets were sold for 2 000.