[QLearner]

Hi! I need to enter the purchase of a business motor vehicle that was bought. A deposit was paid via a business credit card and another payment paid by business cheque. The balance will be financed.How do I show the payment and still put the vehicle into fixed assets account
Thanls

[ROLCAM]

Journal Entry :-

DEBIT Motor Vehicle Account $ 50,000
CREDIT Visa Credit Card Account $ 5,000
CREDIT Bank Account $ 15,000
CREDIT Lender Account $ 30,000

Being purchase of Motor Vehicle .

[ArcSine]

To fully record what you've described, you'll have three credits:

1. A credit to "Credit Card Payable" (or whatever liability account you use to book charges to that credit card) for the portion that was put on the card;
2. A credit to "Cash" or "Checking Account" for the portion paid by cheque;
3. A credit to "Vehicle Note Payable" (a liability account) for the balance that's to be financed.

Your debit to the Fixed Account account to book the accounting cost of the vehicle is just the sum of these three amounts.

You can modify this, to the extent that you've already recorded any portion of the transaction already. For example, if you've already booked the first two items above (with debits to Fixed Asset - Vehicle as the debit side of those two credits), then all that remains is to credit Note Payable and debit Fixed Assets for the amount of the Note.

In any case, the amount that finally ends up in Fixed Assets, as the total cost of the vehicle, is the sum of (1) the amount put on the card, plus (2) the amount paid by cheque, plus (3) the amount financed.

You didn't mention any trade-in, so I'm assuming none. If there was in fact a trade-in, let us know so that we can modify the answer accordingly.

Best of luck!

[ArcSine]

Sorry, ROLCAM... I didn't know you were already on the case!

[QLearner]

You guys are amazing. Thanks-you!

[Cheryl Mckenzie]

My company has bought a new asset and as traded a old asset to reduce the cost. How do I account for the old asset disposal

[ROLCAM]

In the books ,you must book your new asset
NET of any amount received as trade in.
Describe all details in the Journal entry.