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Anyone knows how to record a hire purchase agreement: fixed rate; how to record vat, deposit and monthly installments. It apply to the purchase of van. I will be grateful for a hint.

 
3 REPLIES 3
Frequent Contributor **

Basically the vehicle is a fixed asset Purchase that fixe...

Basically the vehicle is a fixed asset Purchase that fixed asset and tranasfer the purchase to a Long term liability.
 First set up the fixed asset with the correct info of vehicle supplier and set up its fixed asset account so the purchase posts to it.
Now setup a new longterm liability account use vehicle name or reg number to identify.
Enter Gen Journal to Debit accounts payable with name of supplier on the name column and credit the new long term Liability account.
Now purchase the vehicle by entering a bill where you account for the vat on the purchase so now the Asset is posted and you will see there is a credit waiting to be applied which you now apply using paybills.
Now you have both the asset posted & the liabiity the HP company pays the supplier as you have contracts to take th eloan.
Set the loan companyup as a supplier and write cheque to that supplier expensing the bill to the ne wliability account.
Now set up a cheque forteh monthly payment and do not save it memorise it ans then edit to set payment dates & frequency and its all done.

Do not forgett o set up the bank to make the transferes to meet the memorised cheque dates and your bank will pay off the loan, mating with the memorised cheque tranactions which will pay off the liability. So COA always reports current liability and the asset as posted and the asset you can depreciate by normal accounting practice depending on the depriciation rules your company defines.
Experienced Member

Re: Basically the vehicle is a fixed asset Purchase that fixe...

Hi Gordon

Thanks for the answer.

 

I'm very new to quick books, could you break you answer don a bit more for me, to point me in the right direction to create the various accounts you mention?

 

Thank you

 

Paul

QuickBooks Team

Re: Anyone knows how to record a hire purchase agreement: fixed rate; how to record vat, deposit ...

It's nice to have you in the Community, paulcook1979.

 

I'm here to share a step by step process with the instructions provided by Gordon.

 

To set up Fixed Asset, here's what you'll need to do:

  1. Go to Lists menu at the top.
  2. Select Fixed Asset Item List.
  3. In the Fixed Asset Item List window, click the drop-down arrow beside Item and click New.
  4. Enter the Asset Name/Number.
  5. Under Asset Account, click the drop-down and click <Add New>.
  6. Enter Account Name, then click Save and close.
  7. Enter the necessary information like the Purchase Description, Date and Cost.
  8. Click OK.

To set up long term liability account, here's what you'll need to do:

  1. Go to Lists menu at the top, then choose Chart of Accounts.
  2. Click Account at the bottom of the list and click New.
  3. Select Other account types, and then click the down arrow and choose Long term liability.
  4. Click Continue.
  5. Enter the account name and number.
  6. Leave the opening balance at 0.00.
  7. Click Save & Close.

To create a General Journal Entry, here's how:

  1. Go to Company menu at the top, then select Make General Journal Entries.
  2. In the Make General Journal Entries window, change the date if necessary.
  3. Fill in the entry number.
  4. Check the adjusting entry checkbox, as appropriate.
  5. In the detail area, enter distribution lines.
  6. Click Save & Close.

For the detailed steps on how to create a Bill and a check, check out these articles:

For additional reference, you can check out our Community Help articles.

 

That's it! Please let me know if you should have questions about this feature or anything else. I'm always here to help. Have a great day!