Balancing accounts part way through a year

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Flyby
Flyby Registered Posts: 13 Regular contributor ⭐
in AAT Level 3 (Level 6 in Scotland)
Hi,

Just started my level 3 studies. As I am not in the accounting world day to day I am struggling with
balancing off accounts and carrying them down part way through a financial year. For example a vehicle is
sold part way through a year - the vehicle account already has a debit balance of the cost of the
vehicle, credit the vehicle account with the disposal (full price of cost of vehicle), the two sides to the
account balance each other out and this is the end of that asset - so unless there is other vehicles in this
account am I right in saying that there is a zero balance and you just dont have a balance b/d for the rest
of the year.

Oh gosh I hope someone out there gets what I'm on about :confused1:. Many thanks in advance.

Also do you think it is worth me getting a SAGE package to prehaps help me get my head round my studies
a bit easier?

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  • wbauk2002
    wbauk2002 Registered Posts: 110 Beyond epic contributor 🧙‍♂️
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    if there is not asset there will be a zero balance

    and you may be able to find a sage trial to practice on, they are usually 30day, its pretty pricey to buy
  • Flyby
    Flyby Registered Posts: 13 Regular contributor ⭐
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    Thanks for your help and the info regarding sage. When it says in an question for example to balance off all accounts as at 1 february 2010 half way through the year (as this was a question) and you have a zero balance due to the fact there is not then an asset as it has been disposed off, do I just leave it all blank or state that there is a 0 balance?

    Thanks Again
  • wbauk2002
    wbauk2002 Registered Posts: 110 Beyond epic contributor 🧙‍♂️
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    Well say you have

    Debit Car 15000
    Credit Disposal 15000

    The account is already balanced, and there is no balance to bring down
  • Flyby
    Flyby Registered Posts: 13 Regular contributor ⭐
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    Go it, brilliant thanks very much
  • welshwizard
    welshwizard Registered Posts: 465 Dedicated contributor 🦉
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    Double entry to dispose of an asset:

    Step 1
    Remove the asset to the Disposals T-account

    Debit Disposals (Cost of asset)
    Credit Asset (Cost of asset)

    Step 2
    Remove all depreciation associated with the asset that has been disposed of:

    Debit Accumulated depreciation (amount of depreciation associated with the asset)
    Credit Disposals

    Step 3
    Record any sale proceeds

    Debit Bank
    Credit Disposals

    Now an example:

    We sell an asset which cost £20,000 for £3,000. There is £12,000 accumulated depreciation associated with the asset.

    Step 1

    Dr Disposal £20,000
    Cr Asset £20,000

    Step 2

    Dr Accumulated depreciation £12,000
    Cr Disposal £12,000

    Step 3

    Dr Bank £3,000
    Cr Disposal £3,000

    If we balance of the Disposal T Account we would show a Bal c/d of £5,000 (a loss Cost - Depreciation - Sale proceeds) but, as you say the asset account would be zero unless there were already other assets at cost held in there.

    As for balancing off part way through the year, if there has been a disposal and there are no there assets of the same class (e.g. motor vehicles) left then the account would balance to nil carried down BUT if there are other assets of the same class left in the business, then the account would balance with a c/d of Opening Balance + any acquisitions - disposals.

    I hope this makes sense.

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