Car loan entry
This query is : Resolved
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
28 July 2015
Down payment
Car A/c Dr
To Bank
Loan creation (principal amount)
Car A/c Dr
To Car Loan A/c
EMI payment
Car Loan A/c Dr
Interest on car loan A/c Dr
To Bank
Interest on car loan to be charged to P&L , portion of principle amount will reduce the car loan liability.
Car A/c Dr
To Bank
Loan creation (principal amount)
Car A/c Dr
To Car Loan A/c
EMI payment
Car Loan A/c Dr
Interest on car loan A/c Dr
To Bank
Interest on car loan to be charged to P&L , portion of principle amount will reduce the car loan liability.
28 July 2015
sir Is this entry correct ?
car A/c....dr...644301
To car co. A/c...644301
down payment
car A/c......300000
To Bank....300000
Loan Entry
car A/c...........40000
To car loan ..400000
EMI Payment
Car loan A/c....13000
int on loan.......1000
To Bank.............12000
car A/c....dr...644301
To car co. A/c...644301
down payment
car A/c......300000
To Bank....300000
Loan Entry
car A/c...........40000
To car loan ..400000
EMI Payment
Car loan A/c....13000
int on loan.......1000
To Bank.............12000
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.
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.
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