I need to know how to correctly enter the following into the general journal. We are working with little information & must take it on face value.Q. Business purchased vehicle for $20,000. A deposit of $3000 was paid & the business took out a bank loan of 17,000 for the remainder.Originally recorded as-Misc expense 20,000 Cash at bank 20,000I have reversed this entry, as I thinks its incorrect, but unsure on how to complete the rest. the deposit has really got me stumped.
Dear Friend,The entry you have reversed was totally wrong. You have purchased an "Asset" and you cannot record it as an Misc. Expense.The following is the correct way of making an entry to record an purchase of an asset in the manner you have purchased.Asset (Vehicle) A/c DR $20,000TO Bank / Cash A/c (Your down payment)TO Loan A/c $17,000 (Your loan for the remainder amount)Hope this helps.. You may use "CONTINUE CONVERSATION" to revert with additional queries if you have. Rate this answer ONLY IF you are done with this and if this helps and satisfies you.Warm Regards,
Thank you for your help. So the correct adjusting entry would be recorded in the GJ as-Vehicle 20,000 Cash at bank 3,000 loan payable 17,000To record purchase of business motor vehicle
Dear Friend,Yes, that would be correct entry.Hope this helps.. You may use "CONTINUE CONVERSATION" to revert with additional queries if you have. Rate this answer ONLY IF you are done with this and if this helps and satisfies you.Warm Regards,
Financial & Legal Consultant
Graduated in law with Emphasis on Finance - 10 yrs experience