Case Study.... Help!!!

sarahuk3

Hi Everyone,

Just a quick question about posting journals in the main ledger for the acquisition of a new car.

this is what i have that i am working on:

Invoice: Hylex Motors

VX04 TMS 10,900.00
VAT 1,907.50
12,807.50
Excise Duty (12months) 165.00

12,972.50
less p/e -1,850.00
11,122.50

the company is not able to recover input vat on the purchase of a new car, so when i am posting in the main ledger am i using the net value of 10,900?

Thank you!!

Sx

CJC

As you rightly say VAT is not recoverable on the purchase of cars. Thus, the cost of the car to the business is the *gross* amount and it is this that needs to be entered in the ledger. If the vehicles was, say, a van, the cost would be the net value and the VAT would be separated off with a corresponding double entry in the VAT account.

I've an example here which might be of some use.