Interest Free Finance Asset Purchases

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  • Question
  • Updated 7 days ago
Hi guys.
Some of the assets for my business were purchased using interest free finance such as Certegy, ZipMoney, Afterpay etc.
These are payments that are automatically debited weekly or fortnightly from the business account.
I have questioned my accountant about how to allocate these transactions and he has advised the following: 
"Debit Plant & Equipment and Credit a loan account which you call Zipmoney etc"

I have created a current liability for one of the relevant financed items and when I come to allocate the payment that has been debited from the bank I have done this: 

Row 1 - Plant & Equipment      -$59.00

Row 2 - ZipMoney (TV)              $59.00

However, this makes the dollar value disappear from my transactions list after saving. 

The loan account shows -59.00 in red when I look at the chart of accounts in current liabilities 

And the Plant & Equipment shows -59.00 in red under non-current liabilities. 


Can someone help explain to me exactly what I'm meant to be doing here?


Thanks

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Madeleine

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Posted 1 week ago

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Tanya Briggs, Accredited Partner

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Enter a journal to debit the asset account Plant and Equipment for the total purchase amount (if you are registered for GST, attach a tax code to claim the GST).  Enter a second line to credit the liability account for Zippay for total amount payable.  As repayments are made from the bank account, code them to the liability account (do not put a tax code on the repayment).  As repayments are made, you should see the liability account reduce to zero.