28 July 2015
dear sir , is this entry correct
when purchase car (ourfixed assets)
car a/c ...644301
To car co. a/c..644301
when make downpayment
car co . a/c 300000
To bank....300000
When EMI payment
EMI a/c 13001
To bank 13001
18 July 2024
The entries you've described seem to be on the right track, but they need some adjustment to properly reflect the accounting treatment of a car purchase with a loan. Here’s how you should record these transactions in Tally:
1. **Purchase of Car (Downpayment):**
**Entry:** - Debit: Car A/c (Fixed Assets) ………… 300,000 - Credit: Car Co. A/c ……………………… 300,000
**Explanation:** - **Car A/c (Fixed Assets):** Debit this account to increase the asset value of the car you purchased. - **Car Co. A/c:** Credit this account to reflect the payment made to the car company.
2. **Bank Payment for Downpayment:**
**Entry:** - Debit: Car Co. A/c ………………………… 300,000 - Credit: Bank A/c …………………………… 300,000
**Explanation:** - **Car Co. A/c:** Debit this account to reduce the liability to the car company. - **Bank A/c:** Credit this account to reflect the outflow of cash for the downpayment.
3. **EMI Payment:**
**Entry:** - Debit: EMI A/c (Interest or Loan Expense) … 13,001 (assuming this is the interest portion) - Credit: Bank A/c ………………………………… 13,001
**Explanation:** - **EMI A/c:** Debit this account to record the expense incurred on the loan (interest portion). - **Bank A/c:** Credit this account to record the cash outflow for the EMI payment.
These entries ensure that: - The car purchase is correctly capitalized as a fixed asset. - The downpayment and subsequent EMI payments are properly recorded in the respective ledger accounts.
Adjust the account names and amounts based on your specific chart of accounts and the actual figures involved in your transactions. This approach ensures accurate financial reporting in Tally for your car purchase and loan repayment transactions.
CAclubindia
