LEDGER ENTRY

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umesh kumar (Querist)
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28 June 2022 HELLO SIR MY FIRM IS PARTNERSHIP FIRM AND FEW DAYS BACK I BOUGHT A NEW CAR WITH PERSONAL (PARTNER) NAME. SIR SOME PAYMENT OF CAR WE PAID FROM FIRM BANK ACCOUNT AND SOME PAYMENT WE MADE THROUGH BANK LOAN. BUT BANK LOAN IS PARTNER NAME NOT FIRM NAME. HOW WE MADE ENTRY OF THE SAME IN OUR ACCOUNT BOOK. KINDLY CLEAR MY ISSUE EARLY AS POSSIBLE. SIR PLEASE TELL ME CAN I ENTER THIS CAR AS A FIXED ASSETS IN MY FIRM BOOKS ? IF YES PLEASE TELL ME HOW I CAN ADJUST PAYMENT IN DEALER ACCOUNT WHICH I PAID FROM MY FIRM BANK ACCOUNT AND THROUGH BANK LOAN ?

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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09 July 2024 In a partnership firm, when a partner purchases an asset (like a car) for the firm using personal funds or through a personal loan, and the firm also contributes funds towards the purchase, here’s how you can handle the accounting entries:

### Accounting Treatment:

1. **Recording the Purchase:**
- Since the car is intended for business use in the partnership firm, it can be treated as a fixed asset of the firm.

2. **Entry for Payment from Firm's Bank Account:**
- Debit the Fixed Assets account (e.g., "Vehicle" or "Car") with the total cost of the car.
- Credit the Bank account of the partnership firm with the portion of the payment made from the firm's bank account.

3. **Entry for Payment through Partner's Bank Loan:**
- Debit the Fixed Assets account with the total cost of the car.
- Credit the Loan account (representing the partner's personal bank loan) with the portion of the payment made through the loan.

4. **Adjustment in Dealer's Account:**
- Create a dealer's account in your books if it doesn't already exist.
- Record the payment made directly from the firm's bank account as a debit to the dealer's account.
- Record the payment made through the partner's bank loan as a separate entry in the dealer's account, specifying the source of the payment (partner's loan).

5. **Depreciation:**
- The car will be depreciated over its useful life as per the firm's accounting policy. Depreciation expense should be recorded periodically (usually monthly or annually) to allocate the cost of the car over its useful life.

### Example Entries:

Assuming the total cost of the car is ₹10,00,000, and ₹6,00,000 was paid from the firm's bank account, and ₹4,00,000 was financed through the partner's personal bank loan:

1. **For Payment from Firm's Bank Account:**
- Debit: Fixed Assets (Vehicle) ₹10,00,000
- Credit: Bank Account (Firm) ₹6,00,000
- Credit: Dealer's Account ₹6,00,000

2. **For Payment through Partner's Bank Loan:**
- Debit: Fixed Assets (Vehicle) ₹10,00,000
- Credit: Loan Account (Partner's personal loan) ₹4,00,000
- Credit: Dealer's Account ₹4,00,000

### Additional Considerations:
- Ensure that you maintain proper documentation for the purchase, including invoices, loan agreements, and bank statements, to support your entries.
- Consult with your accountant or tax advisor to ensure compliance with tax laws and to determine any tax implications related to the purchase and use of the car in the business.

By following these steps, you can accurately reflect the acquisition of the car in your partnership firm's books and maintain clarity regarding the source of funds used for the purchase.