Debit and credits!

fatandfortyfatandforty Experienced MentorPosts: 553Registered
Please can somebody tell me if you buy a van on credit what do you debit and credit in the t accounts? I know there would be a van account but do you then debit purchases? The same with stationery and fixtures? Set up a stationery and fixtures account and credit those and debit purchases?

Many thanks for any help offered:001_smile:

Comments

  • fatandfortyfatandforty Experienced Mentor Posts: 553Registered
    It can't be purchases can it unless you are going to re-sell the items. Do you then set up an account in the name of the company you bought the van etc from? But then where will the debit figure be on the trial balance sheet??:confused1:
  • crispycrispy Trusted Regular SouthamptonPosts: 454Registered
    Hello,

    If you have purchased the van on credit the journal would be:

    Dr Motor Vehicles
    Cr Creditors Control

    Set up your supplier in the purchases ledger and post the invoice to their account using the correct Nominal ledger code for Motor Vehicles.

    The purchases account as suggested is for cost of goods sold (entries to which would depend on your business type). The van (Debit figure) would sit on the balance sheet as a fixed asset measured at cost less any accumulated depreciation.
    :001_smile:
  • fatandfortyfatandforty Experienced Mentor Posts: 553Registered
    Lovely, thank you very much for that :001_smile:

    Have another one now:

    Started business with £3.5k cash but only put £2,800 in the bank so debit bank £2,800 credit capital £3.5 but where does the other £700 go?
  • A-VicA-Vic Expertise Guaranteed Posts: 6,970Registered
    Lovely, thank you very much for that :001_smile:

    Have another one now:

    Started business with £3.5k cash but only put £2,800 in the bank so debit bank £2,800 credit capital £3.5 but where does the other £700 go?

    Petty cash i think
  • fatandfortyfatandforty Experienced Mentor Posts: 553Registered
    Thank you :001_smile:

    Have had so much homework the last couple of weeks that I seem to have stopped being able to work anything out now.
  • crispycrispy Trusted Regular SouthamptonPosts: 454Registered
    I agree with above Dr to Petty Cash/Cash In Hand A/c (I like the avatar pic - used to love watching that program as a school kid :001_smile:)
  • A-VicA-Vic Expertise Guaranteed Posts: 6,970Registered
    crispy wrote: »
    I agree with above Dr to Petty Cash/Cash In Hand A/c (I like the avatar pic - used to love watching that program as a school kid :001_smile:)

    :001_tt2: thanks hehe
  • taskeytaskey Font Of All Knowledge Posts: 1,800Registered
    A-Vic wrote: »
    Petty cash i think

    or cash held maybe?

    Tracy
  • A-VicA-Vic Expertise Guaranteed Posts: 6,970Registered
    taskey wrote: »
    or cash held maybe?

    Tracy

    Or cash in till - basically its any other account where money is held apart from the bank account
  • fatandfortyfatandforty Experienced Mentor Posts: 553Registered
    Thanks everyone - it's all making more sense now. :thumbup:
  • LynseyLynsey New Member Posts: 12Registered
    Petty cash???

    looking through the questions and replies about the van and 700 ......someone said it would be in petty cash account.....how can it when petty cash is for small expenses e.g coffee postage stamps etc please advise
  • Jon_1984Jon_1984 Well-Known Posts: 186Registered
    There are no set rules on what happens with petty cash - it is entirely up to the organisation in question.

    The amount held in petty cash is entirely up to the company concerned, an SME with 10 staff will have a lot less petty cash turnover than a one with 50 staff.

    It will also depend on the policys of what goes through the cash tin. E.g. where I work we used to pay all the van's fuel in cash, so needed a much larger balance than once we got the fuel card. Another example is if customers cash payments go through petty cash as opposed to a till system.

    It can also depend on the cashiers assessment of what will be going on in the short term future. E.g. if we have a large event coming out we will draw more out so anyone can nip to the shops if needed.

    Hope this helps.

    Jon
  • LynseyLynsey New Member Posts: 12Registered
    thank you

    thank you for explaining this much appreciated, these are things we are not taught by the tutor's

    Lynsey
  • toastertoaster Just Joined Posts: 1Registered
    could be wrong but i'm pretty sure you can reclaim VAT on vans so you would be posting to the VAT account as well.
Sign In or Register to comment.