Purchase of a new car and disposal of an old fixed assed

tracyrknight

Please help!!!!!!!!!!!

In the journal, how do I record the purchase of a car, partly funded by part exchange which is the disposal of an old car, if the company cannot claim VAT back on the new car?

I've only dealt with the claiming back of VAT on a new fixed asset but I need to incorporate entries into the Purchase Ledger Control account and I'm not sure what amount goes in there? Is it the net + VAT CR? If so, where do I post this in DR to balance it up?

Thanks!!!!!

taxing-times

The debit will go to the Motor Vehicles at cost account.

The double entry would be:

Debit: Motor vehicle cost additions £X (inc. VAT)
Credit: Purchase ledger control £X (inc. VAT)

As VAT is not receoverable it gets included within the cost of the asset.

Hope that helps

numberjunky

Dr Disposals (with full value of disposed car)
Cr MV at cost (with full value of disposed car)

Dr Accumulated Dep'n (acc. dep'n of disposed car) *you will probably have to calculate this
Cr Disposals

Dr MV at cost (the payment from the bank)
Cr Bank

Dr MV at cost (with the P/X figure)
Cr Disposals

The balance b/d on the Disposals A/c will be a profit/loss that has been made on the car.

I hope this is right or I'll look a right dummy!

tiamaria

Thank you SO much. I'll practise these for the simulation which I'm dreading!!