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New Vehicle Purchase

Julie C

Hi Community,

The business has purchased a new vehicle under finance (Commercial Loan). I have the funding schedule which itemises the amount of credit (vehicle purchase cost), amount of interest and a service fee which is payable monthly over a specified term. What is the best way to process this in Reckon Hosted. I am able to claim the gst up front for the purchase which was in June and the first monthly payment was in July.

Thanks

Accepted answers

All comments

Kris_Williams

I do a journal entry debiting the asset account and making sure you only claim the GST on the invoice, you might have to enter 2 lines to the asset account to achieve this, and crediting the loan (liability account). If it is an amortisation schedule you have you then enter the monthly payments as per that schedule, entering the principal to the loan account and the interest charge to an expense account (I use HP fees) with no tax code.

if there are any additional fees that you need to enter to make the journal agree with the total of the loan I enter them also to HP fees in the journal

Acctd4

I do similar to Kris but I like to enter a Bill for the asset purchase with a GJ to Accounts Payable to “pay” it & to record the fees & interest - The other side of the GJ creates the finance liability open balance.

I then create a Memorised “repayment” Chq that just posts back to the finance liability account (NO tax code) reducing it each time ☺️

Kris_Williams

I used to use the memorised cheque but amortisation schedules have the principal increasing and interest decreasing so even if it’s memorised you have to change the details every month, as always, many different ways to get the same result.

Acctd4

Yes, depending on the type of finance (eg if it’s insurance premium funding over the 10 mths all within a single FY), I add the interest upfront in the GJ as per previous so the only line is the single repymt amount.

If it’s long term, I edit the interest amount each month as per the amortisation schedule.

Julie C

Thank you Kris & Shaz,

Could you take a look at my GJ and the purchase invoice. Do I add the trade in and deposit figure here also for the GJ to equal the invoice? Then make a monthly memorised transaction for the loan repayments (long term). I used the liability account (motor vehicle chattel mortgage) as it was in my chart of accounts or should I create a new liability account. I think I'm confusing myself 🤦‍♀️

Invoice.png

Kris_Williams

Call me please

0415940843

Kris_Williams

I would do this

debit. Asset account. 87106.24. NCG. 8710.62

debit. Asset account. 2592

debit Ins & Rego. 1068.60

credit. Asset account. 11818.18. GST

credit. Bank or credit card. Acct you used 500.00 (this should contra out the payment of deposit

credit. Loan account. 85977.46

Find the original payment of 500 and post it to a clearing account and this journal will negate

if you can’t do the trade-in on the same journal because of 2 different tax codes you will have to do 2 entries

Acctd4

I find it better to record the Trade-In as a Sales Receipt - This is much clearer for identifying the specific transactions down the track & ensures there are no anomalies with the BAS/GST side. Sometimes GJs can reflect incorrectly for income/expense Tax Detail reports &/or for Simplified BAS prefill

The Sales Receipt trade-in amount can be deposited to a Clearing account with a corresponding negative line on the Bill purchase, posting back to there to offset it ☺️

Note: Modern accounting programs like this one are not designed to be driven by GJs as it automatically creates these for you in the background. I find GJs are best used only when there is no other option for an entry eg depreciation etc ☺️

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