How to record car purchase with loan, cash down, sale taxes and depreciation... The whole thing!

Probably a very common question, but could not find how to record it all... The company just purchased a car for use by the owner and I need to record it all and track all of it...

So, simply said, I want to know how to record the purchase of a fixed asset (i.e. the company car) paid using a loan and some cash down from the owner and trade-in from the owner. Also I need to record monthly payment and depreciation to the car that will be paid by the company (cash down and trade-in will be reimbursed to the owner as well). I know how to do some of it, but when I try to put it up all together, I am missing some parts in all of it... Missing the big pictures so I need help in tying all this together... So I need to be told how to record this kind of purchase.

Thanks in advance...

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4 Replies

CountryMusicMom

Allstar

10/01/10 12:02pm PDT

This is really a question for the company accountant.

The accountant would know how to handle the entries regarding the trade in of a personal vehicle towards the purchase of the company vehicle and the cash provided by the owner.

The accountant will take into consideration the type of company (Incorporated, Sole Proprietorship, etc.) for tax purposes, will the vehicle be solely used for company use, or is there personal use involved, etc., etc.

Much more involved than just the actual entries.

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Eric_Therrien

New Member

10/01/10 4:42pm PDT

Ok, let's say the accountant asked to do all this.

i.e. manage the new asset, it's depreciation over time, record the loan and payment, so it show as a liability and record sales taxes for refund. The rest I would actually be good at figuring it out how to record it, I just don't know how from the created car asset, how to record it's loan (and the remaining payments) and post the taxes on it for refund.

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lynntax

Contributor

10/06/10 6:22pm PDT

When I do these transactions, I go to "Enter Bills" as you want to put the loan from where you have the loan placed. Then in the bottom part make sure to enter your vehicle as the asset. Depending on how you are handling anything the owner puts in the company (whether it is cash etc) you would enter the trade-in as the owner's money contributed to the company as well as the cash as it is from the owner. The interest will go in interest payable as it will be moved by a journal entry at the end of the year for whatever interest is pertaining to that year. When you make your payment to the loan, go to "Pay Bills" and make sure you enter the payment when you tick the box at the transaction for your vehicle otherwise the whole amount shows up. The depreciation, of course, will be a journal entry at the end of the year for the amount of your vehicle purchased along with any other vehicles the company has.

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Bert_Mulder_CGA

Contributor

10/06/10 7:11pm PDT