Hi,My Company has purchased a fixed asset through hire purchase. I need help with the following1. Can i account this this as purchase thru loan?2. How Do i account this transaction (A/Ps) for the future instalments.ThanksSara
What is an ?asset through hire? purchase? Richard
Hi Richard,
Let me rephrase my question. A fixed asset was purchased with an initial down payment and the balance to be paid over a period of time as monthly payments. There are provisions to record the down payment in QB, but was wondering how to record the balance - should i create an AP account, how to record interest if any. Does QB have facility for "hire purchase" transactions?
Thanks.
Sara
Sara
The purchase entry (using write checks) would be:
Debit fixed asset account
Credit loan due liability account
Credit cash account, for down payment amount.
For the monthly payments, and interest is paid, the monthly entries, using write checks, would be:
Debit loan due liability account
Debit interest expense account
Credit cash account
Also monthly, using a general journal entry:
Debit depreciation expense
Credit accumulated expense
If no interest, leave out the interest debit.
I think ?hire purchase? must be what in US accounting would be called a capital lease, where ownership will shift to the lessee at the end of the loan payments. If yes, the entries above are still what I would make.
?Hire purchase? is a British term isn?t it? Richard
Hi..Any comments for early settlement for hire purchase..From my understanding.Is it correct..
Dt - Disposal of Fixed Assets
Ct - Fixed Assets
Dt - Accumulated Depreciation
Ct - Disposal of Fixed Assets
Dt - Hire Purchase creditor
Ct - Disposal of Fixed Assets
Dt - Disposal of Fixed Assets
Ct - Hire Purchase INterest in suspense
Dt - Disposal of Fixed Assets
Ct - Bank (for remaining cash to be paid)
