Journal Entries
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We've just started journal entries on Intermediate and have been given homework. Most of it is straight forward but I am struggling with the entries for the part exchange of a vehicle. We have covered part exchange and disposal a/cs but I'm not sure how it is shown on the journal. Can anybody help? Thanks
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Journal Entries
Give me an example as it all depends whether there is a profit or loss on the disposal0 -
Journal Entries
The basics is that you will have three accounts, the fixed asset account for the car which will be a debit balance of the original cost, a provision for depreciation account with a credit balance of the total depreciation to date, and a disposals account which wont have anything in it!<BR><BR>First of all you need to get rid of everything into the disposals account, so the journal entries will be credit car account with total original cost, and debit the disposal's account with the amount. Then the next journal entries would be debit the provision for depreciation account with the total depreciation for the car and credit the disposals account.<BR><BR>The next thing is the trade in value. This is equivalent to receiving money for the car as though you sold it, so you need to do a journal to credit the disposals account with the amount and a debit entry into the fixed asset account for the new car as the double entry. The balancing figure in the disposal account will be the loss or profit made and be written to the P&L. The amount paid for the new car will be debited to the car account and the double entry will be a credit to the cashbook.<BR><BR>Hope this is clear and has helped!0 -
Journal Entries
I think Craigy explanation is clear enough.<BR>0 -
Journal Entries
Thanks for that. It has been a big help. Sometimes getting somebody elses view on a topic helps.0