How to account transaction

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 May 2013 Dear Experts,

Please provide the expert view..

We have purchased car for 70 lacs, loan received from bank 70 lacs, now transactions would like this.( Loan directly given by bank to motor company).
Loan amount 70 Lacs, and one installment is upfront i.e i got 68,50,000.
Now
1. Motor car Dr 70 Lacs
Cr ICICI bank Rs 70 lacs

2. Now how to record upfront instalment i.e if i give
ICICI Dr 150000 ( Upfront loan installment)
CR ????? ( i can't give bank as amount not came to account?????

CA. RICHI SAXENA

CA. RICHI SAXENA (Expert)
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23 May 2013 HAVE YOU PAID ICICI BANK 1.5 LAKH RUPEES AND IF YES THEN WHAT WAS THE MODE OF PAYMENT?

Ganeshbabu K

Ganeshbabu K (Expert)
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23 May 2013 I understood ur banker paid loan directly to car delear and u have to pay it as monthly emi's
1)CAR A/C Dr
to car delear a/c
(asset purchased)
2)car delear a/c dr
to icici baank car loan a/c
(being amount paid to delear from icici bank loan)

and above liability decreases with our emi payments

3) icici bank car loan a/c dr (amt. of emi)
to bank a/c
(being emi april 2012 paid )

4)Interest on car loan a/c dr
to icici bank car loan a/c
(being interest charged on car HP loan)

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Querist : Anonymous

Querist : Anonymous (Querist)

24 May 2013 Here the problem is

Loan amount is Rs 70 Lacs,
Loan statement is showing
Loan Rs 70
advance EMI : one i.e 1,50,000
Balance will be 6850000 in 60 installments.
Now question how to account that adavance EMi as on 31st Mar,13
Problem here is i can give debit loan acount , but can't give credit to bank as amount has not gone from accounts.

Should i provide provision for payemnt ? how i t is?

CA. RICHI SAXENA

CA. RICHI SAXENA (Expert)
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24 May 2013 THE PROBLEM HERE IS SOMEWHAT DIFFERENT FROM NORMAL CIRCUMSTANCES GANESHBABU K.

THE PROBLEM STATED BY THE AUTHOR STATES THAT BASICALLY EMI HAS TO BE CALCULATED ON Rs.6850000.
AS THE BANK HAS ADVANCED YOU A TOTAL SUM OF Rs.70 LACS SO THE FOLLOWING ACCOUNTING ENTRY WILL BE MADE IN THE CASE MENTIONED:-

CAR A/C Dr. 70 LACS
TO CAR DEALER A/c. 70 LACS

CAR DEALER A/C Dr. 70 LACS
TO ICICI BANK CAR LOAN A/c 70 LACS

NOW IF THE BANK HAS ADVANCED YOU A SUM OF Rs.70 LACS THEN THE AMOUNT CAN NOT IN ANY CASE BE REVERSED BY THE BANK ITSELF.
I WILL NEED TO KNOW WHAT IS THE CLOSING BALANCE OF THE LOAN ACCOUNT AS ON 31 ST MARCH 2013.
PLEASE CHECK IT MINUTELY WHETHER THIS AMOUNT OF Rs.150000 INCREASED THE NET AMOUNT IN THE STATEMENT OR DECREASED THE NET AMOUNT IN THE STATEMENT.
PLEASE ALSO STATE THE NET AMOUNTS SHOWN IN THE STATEMENT BEFORE AND AFTER THIS ENTRY OF RS.150000.

Querist : Anonymous

Querist : Anonymous (Querist)

25 May 2013 First two entries were perfectly alright.

My question is accounting of the 1st installment. Bank loan statement saying that loan amount is Rs 70 lacs, bank is recovering Rs 68.5 lacs from company .

Only assumption i could make out of the above is 1st EMI is discount due to this entries in my books would be Asset ac 70 lacs, loan would be 70 lacs, repayments would be 68.5 lacs and discount would be 1.5 lacs.

Please provide if you have any other view on the above.

CA. RICHI SAXENA

CA. RICHI SAXENA (Expert)
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27 May 2013 I AM NOT BEING ABLE TO UNDERSTAND THE SITUATION MENTIONED BY YOU. HOW CAN A BANK GIVE DISCOUNT OF RS.1.5 LACS?
I THINK THE BANK HAS FORWARDED A LOAN AMOUNT OF RS.68.5 LACS ONLY AND AS SUCH THE FIXED ASSET MUST ALSO BE SHOWN ON THIS AMOUNT.
I WILL BETTER ADVISE YOU TO APPROACH THE BANK OFFICIALS AND ASK THEM FOR THE TRANSACTION OF RS.1.50 LACS. THIS WILL BE THE BEST OPTION TO SOLVE THIS CASE.

Querist : Anonymous

Querist : Anonymous (Querist)

27 May 2013
Thanks for your mail.

We have approached the bank and manufacture also to find the exact cost of the car and loan amount.

Even surprisingly loan statement is showing Rs 70 lacs is loan , 1 is advance installment, 60 would be remaining installment for 68.5 lacs.

How ever it would be clear if i get the confirmation from the bank .

Thanks for your time to provide the response.

Regard

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CA. RICHI SAXENA

CA. RICHI SAXENA (Expert)
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28 May 2013 We at CACLUB are to solve the issues only and it is my pleasure that i could solve your particular issue.

Regards,
CA.Richi Saxena

Message likes : 2 times

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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13 July 2013 I agree with the experts but to solve your problem you have to pass the following entries

1) Car Dr.
ICICI Car Loan Cr.

2) ICICI Car Loan Dr.
To ICICI Bank A/c Cr.