Fixed Asset problem - Unit 5
Mathew_Hill
Registered Posts: 23 New contributor 🐸
Hi everyone
I am doing a practice unit 5 skills test at the moment and have encountered a problem.
In the skills test my company buys a new company car for £11,122.50. Obviously I have debited the fixed asset account as per normal.
However I have been looking at all the accounts given to me and there is no bank account! So I was just wondering which other account I should credit?
Any help would be very welcome.
Thanks,
Matt
I am doing a practice unit 5 skills test at the moment and have encountered a problem.
In the skills test my company buys a new company car for £11,122.50. Obviously I have debited the fixed asset account as per normal.
However I have been looking at all the accounts given to me and there is no bank account! So I was just wondering which other account I should credit?
Any help would be very welcome.
Thanks,
Matt
0
Comments
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Is there any creditor accounts? Purchase Ledger Control? Have you read through all the notes, it may be all purchases are on credit and not paid by cash/bank.0
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It says that 'The new car will be fianced partly by the trade in value (Agreeat £1850) and partly by cash.
It also says that a creditors account has been opened in the name of the supplier of the car in the subsidiary (purchases) ledger. However only the main ledger accounts are given.
There is a Purchases Control Account but I thought this is only used for purchases for resale?
Matt0 -
I would DR the FA - Motor Vehicles with £9272.50 and then CR PLCA for the same amount. This is because with the trade in knocked off this is all you will owe to the dealership.
Then the car thats being traded in will then have been disposed of in the accounts. This will result in the 'trade in allowance' being debited back to the new FA - Motor Vehicles for the value of £1850.
This will leave a total fixed asset value of £11,122.50.
Also from what i understand all general creditors are included in the PLCA not just goods bought to be re-sold.0 -
I don't think subtracting the value of the trade in from the value of the new car and posting that figure is correct.
You need to credit fixed assets with the trade in value of the old car and debit it with the value of the new car plus do the relevant entries through PLCA or the bank.
I may be wrong, I've only just started this bit and I think there might be a disposals account involved too.0 -
You might find «my notes» on part-exchange useful. In my example I've used a 'Sundry Creditors' a/c but that's just the same as the vendor's purchase ledger account would be. You'd then need to post the balance to the PLCA.0
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sarahwilson wrote: »I don't think subtracting the value of the trade in from the value of the new car and posting that figure is correct.
You need to credit fixed assets with the trade in value of the old car and debit it with the value of the new car plus do the relevant entries through PLCA or the bank.
I may be wrong, I've only just started this bit and I think there might be a disposals account involved too.
This is an example of what i was trying to explain ... http://www.mediafire.com/?4dmnzxujnmr
You end up with the correct new car value of £20,000 and the disposals account shows the loss of £1000 suffered with the part exchange.0 -
Thanks everyone- You have been a huge help!0
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Vat on sale of vehicleYou might find «my notes» .
CJC
I saw your notes on disposal of a commercial vehicle. I can see that you claimed VAT on purchase of new van. I presume that the van you are disposing now, you would have claimed VAT. Hence, on disposal you have to account for the VAT.
So you receive gross £3000.00 and you have to convert to net, and pay the vat over to Revenue and Customs. If we take £3000.00 proceeds than, net amount would be £2553.19, VAT 446.81. This will change your loss on disposable too.
This will make some of your figure incorrect.
Nilesh0
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