Please help with advice

andy1234

hi everyone. I am trying to do a set of account and am having a mad moment and wondered if anyone could help. The account is a partnership, and the partners have made a loan to the company in order to purchase two new vans. the company then part paid for the two vans from this money and part from money already within the company. there was also a part exchange on both the vans.

I would like to know what the dr and cr's would be for this.

Any help would be greatly received. thank you in advance.

Andy

mark130273

need to know the market value of the vans part exchanged and wether you made a profit or loss ?

andy1234

hi thanks for replying. the proceeds of the vans where 5052.50 and nbv was 3430 so profit o sale of asset of 1622.50 However i am unsure whether to set up a loan account for the 24000 introduced by the partners or to put this as capital introduced. I have debited the net cost of the new vehicles to the motor vehicle control a/c and credited the bank payments. is this correct?

Cullen

If the Partners expect this loan to be repaid, then I would set it up as a loan in the liability section of the balance sheet, possibly as a separate loan for each of the partners, depending on how the loan was set up.

If the partners don't expect a repayment of this loan, then I would cosider it as Capital introduced.

I would chat to them and see how they view this transaction.

If you have done Intermediate, you can review how to deal with FA acquisitions and disposals. If not I suggest:

A. Disposal:
Cr: FA Cost, Dr: Disposals
Dr: Acc Dep, Cr: Disposals
Dr: FA Cost(£value of P/Ex) Cr: Disposals
B. Acquisition
Dr: FA Cost(Bal of payment) Cr: (either bank or partners' loan a/c)

However I would check with the partners or with their accountants just to make sure you have got the funding issue correct.

andy1234

hi thanks for replying. I work for the accountants representing the client in question and have just taken the technician exams. However after bringing forward the previous years balances on the etb i have entered the bank payments in the bank column. (cr total payment dr expenses) This meant that i debited the actual figure paid for each van to the FA Cost a/c. this figure is less the part exchange and the vat. do i need to add these back before doing the disposal etc?

Cullen

I am not too sure if I have understood you properly.

If these are company vans, the Vat should not go to the FA cost. You might want to review this and reverse this transaction if it includes Vat.

By "debited the actual figure paid for each van" do you mean the total value or just the balancing payment after the p/ex value?

It may be easier to root out your unit 5 textbooks and read through them so you understand the mechanics of the transactions. Perhaps you could discuss this with your line manager?

andy1234

Hi sorry i should already know this information as i have just completed technician.

Yes the actual figure paid is the balancing payment after the p/ex value.

Im afraid my boss is off sick for a few weeks so i am the only one in the office and i don't have my books with me. It has also been a while since i've done unit 5 or dfs.

Thank you for your help it is very much appreciated.

andy1234

Hi I have finally completed most of it now with your help. But for the acquisition "Dr: FA Cost(Bal of payment)" will i have to do this as a journal as i already have the (cost less vat and p/ex) debited to the FA cost a/c from the bank payments. If that makes any sense.

Cullen

Hmm. I think you are doing ok.

When you accounted for the p/ex did you debit the FA cost? If you did then debiting the FA cost with the balancing figure should leave this account with the correct figure for the total FA cost, P/ex plus Bal Fig. Reconcile what is in the FA account to your FA register.

Look at what I put in my first response. The "sale" of the old vehicle should be a dr to the bank if cash or a dr to FA cost if used as p/ex. You should only put into FA cost what the total net value of the new vehicles amount to.

andy1234

Thank you very much that has been a huge help.

Cullen

You are welcome!