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.
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.
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