Our Co purchased a Car. Pls show the respective entries related to Total Car Amount; Down payment (part payment), loan from Bank; Interest on loan; Processing fee.
It would be of great help if you can show me the respective entries Dr and Cr wise, with indicating the main and sub head of accounts for creditor and general ledger a/cs.
Also, is the interest for a year needs to be entered as a single amount or month-wise.
when loan disbursed, Car A/c. Dr.XXX To Lending Bank Cr.
Loan processing fees, Bank charges Dr.XXX To bank a/c. Cr.XXX
When installment due and paid (monthly installment entry) Lending Bank Dr.XXX Interest expense Dr.XXX To bank a/c. Cr.
Head of accounts, Car A/c. under Fixed Assets Interest expenses under indirect exp. (in balance sheet under finance charges) Lending bank under secured loans. Bank charges under indirect exp. (in balance sheet under finance charges)
Pass interest entry on monthly basis, you will receive statement of monthly installments (bifurcation into principal and interest) based on which book entries.
CAclubindia
