Can someone please help with the bookkeeping entries for a vehicle purchased on finance.? I use Sage v14. The co. purchased a new van for £10,880. A deposit of £2000 was made and the remainder of £8,800 will be paid off over 36 Months. The repayments will be 1x £447.94 34x £282.94 1x £377.94 Total of £10445.84 So far I have posted a payment through th ecurrent account to the vehicle supplier of £2000 using nom code 0050 (vehicles) but am wanting to allocate the monthly repayments correctly. Can anyone help with the the postings necessary? Thanks Graham
You have already done this. Now you need to incorporate the HP element. As the Van is worth £10,880 you will need to Dr Fixed Assets to recognise this. The problem is that you are paying off more than this over 36 ie £10,445.84. Or interest/charges of £1565.84 which will be written off to your p&l over the 36 months.
Your standard payment appears to be £282.94. Your first payment appears to have an extra £165 and your final payment an extra £95 which normally is some sort of arrangement fee/option to buy fees. I would treat these as interest charges so that effectly you should be paying £282.94 per month for 36 months. As the capital element you are paying over 36 months is £8,880 this is £246.67 (£8,880/36) per month so this means the interest element on your monthly payment is £36.27 (£282.94 - £246.67).
So your journals to record are as follows
Dr Fixed Assets £8880 Cr HP Liabiltiy (Balance Sheet n/c 2xxx) £8880
to recognise the capital liability
Dr HP P&L 79xx (one off charge) £165 Dr HP P&L 79xx (monthly interest) £36.27 Dr HP Liability £246.67 Cr Bank £447.94
with your first payment
Dr HP P&L (monthly interest) £36.27 Dr HP Liability £246.67 Cr Bank £282.94
with your next 34 payments
Dr HP P&L (one off charge) £95 Dr HP P&L (monthly interest) £36.27 Dr HP Liabilty £246.67 Cr Bank £377.94
with your final payment
So in effect you recognise £10,880 in your assets which is correct and a liabilty of £8880 at the start which is reduced each month by £246.67 until it is cleared at the end of the 36 months.
Just noticed that you have a conflict in your figures. Your say the new van is £10,880 total but was paid as £2k deposit and £8800 finance. These off course dont add to £10,880 but £10,800 (£80 difference). In my example above have taken the correct figure as £10,880 with £8880 finance.
If it is £8800 finance then the split of capital and interest of your monthly £282.94 payment is £244.44 capital and £38.50 interest. So just substitute these for £267.67 and £36.27 above.
