I am an accounting newbie so please go easy on me! My partner and I have set up a small LTD company and I am trying to put all our accounts through sage to save on our accountants fees at the end of the year!
We have just taken out a hire purchase on a new van, and I am confused how to account for it in Sage.
We pay a deposit of £899.22+VAT, 47 monthly payments of £246.74+VAT followed by a final rental payment of £4,750+VAT
Any tips would be gratefully received! An added confusion is the list price of the van is £21,968.33+VAT, and we have clearly been given a discount by the dealer so what should I record as the asset value? The paperwork doesnt state an APR anywhere...
BUT..imagine its £15,750+VAT, would I:
Create a purchase invoice for £15,750+VAT, logging the vehicle as an asset
Create a new "Vehicle Finance" loan account
Pay the deposit amount from the invoice using the current account
Pay the remainder of the invoice using the loan account
Pay the remaining monthly payments each month from the current account to the loan account
The big unknown for me in this scenario is the VAT treatment - do I claim the full amount at the start, despite not having paid it? Doesn't seem right....
I had this with a vehicle of ours which also included a trade in.
What I did was post the invoice to an account in the name of the supplier, then post a payment of £1079.06, for your deposit and post a credit to 12XX (set up a finance account something like 1260) for the remaining amount of the invoice coded T9 for vat. This leaves you with a credit balance in your finance account for the remainder of the invoice, you will have also put all your vat through in one hit as you should be claiming the full amount as per the tax point.
Then you will make a bank payment whenever your DD is taken which will credit the bank and debit the finance account therefore reducing the balance over time.
I think I've got it right without going back over everything I posted to sage.
