Download PDFBookkeeping – Journals for HP and Purchasing Fixed Assets
This complex journal requiring multiple entries is often daunting for most and I will demonstrate how best to do these.
I will pass each journal as a full value with both the credit and debit as well as showing VAT as a separate line.
The Finance Deal Journal example will use the following figures . (Page 2)
- Purchase price of vehicle (Incl. VAT) R228,000.00
- Cash Deposit Paid R 35,000.00
- Amount that will b financed via bank R193,000.00
- Interest rate per year 12%
- The finance deal will be over 4 years
- The full finance charges in advance. (On HP Agreement) R 50,956.65
- HP Document Fees / Bank fees on HP Agreement (Incl VAT) R 1,710.00
The Monthly Debit order paying off the finance deal will use the following examples. (Page 3)
| Deal Description | Bakkie | ||||||
| Account No | 1 | ||||||
| Principal Debt | R 193,000.00 | ||||||
| Interest Rate Start / Yearly Rate | 12.0000% | ||||||
| Months / Periods to repay | 48 | ||||||
| Start Date First Payment | 2009/11/01 | ||||||
| Initial Monthly/Periodic Payments | R 5,082.43 | ||||||
| Total To Pay Including Interest | R 243,956.65 | ||||||
| Initial Deffered Finance Amount | R 50,956.65 | ||||||
| Period | Date | Capital Outstanding Pre Payment via Debit Order | Interest Rate | Interest Amount for that Period | Monthly Repayment | Deffered Finance Pre Monthly Payment | Total Still Owing |
| 1 | Nov 2009 | R 193,000.00 | 12.0000% | R 1,930.00 | R 5,082.43 | R 50,956.65 | R 243,956.65 |
| 2 | Dec 2009 | R 189,847.57 | 12.0000% | R 1,898.48 | R 5,082.43 | R 49,026.65 | R 238,874.22 |
| 3 | Jan 2010 | R 186,663.62 | 12.0000% | R 1,866.64 | R 5,082.43 | R 47,128.18 | R 233,791.79 |
| 4 | Feb 2010 | R 183,447.82 | 12.0000% | R 1,834.48 | R 5,082.43 | R 45,261.54 | R 228,709.36 |
| 5 | Mar 2010 | R 180,199.87 | 12.0000% | R 1,802.00 | R 5,082.43 | R 43,427.06 | R 223,626.93 |
The above excel schedule that creates and calculates monthly figures can be requested from us. Email us to get your copy. The above only shows 5 months out of the 48 months the deal is for. The above excel schedule also caters for interest rate changes and will recalculate all figures from that point onward.
With the exception of the Green Deposit figures that needs to be captured in the appropriate cash book, so that this figure is present in the bank recon, all the other entries would be as a journal.
Finance Deal Journals
| Example Acc No. | Account Description | BS or IS | Dr | Cr | Description / Notes |
| 6000/000 | Fixed Assets Vehicles – Net Value | bs | |||
| 6000/100 | Fixed Assets Vehicles @ Cost | bs | R 200,000.00 | Full Excl Value of Car | |
| 9300/000 | HP Finance Deal no 1 | Main Account of Finance Deal GL accounts so you can see approximate NET settlement deal if you settle early (Excluding penalties) | |||
| 9300/100 | HP Finance Deal – Statement Value | bs | R 35,000.00 | Deposit reducing amount owing to bank (Captured in Cash Book) | |
| 9300/100 | HP Finance Deal – Statement Value | bs | R 200,000.00 | Total Purchase price of Car Excl VAT Contra from the Fixed Assets Entry | |
| 9300/100 | HP Finance Deal – Statement Value | bs | R 28,000.00 | Full VAT portion of purchased Car. This entry could be included with above journal using Tax Type (Capital) and the contra account is the FAR | |
| 9300/100 | HP Finance Deal – Statement Value | bs | R 1,500.00 | Document fees added to Bank HP aggrement (Excl VAT) | |
| 9300/100 | HP Finance Deal – Statement Value | bs | R 210.00 | VAT portion of Document and Bank Fees on HP Tax Invoice | |
| 9300/100 | HP Finance Deal – Statement Value | bs | R 50,956.65 | Future Finance Charges (Shown nn HP Agreement) | |
| 9300/200 | HP Finance Deal – Deffered Finance | bs | R 50,956.65 | Future Finance Charges (On HP Agreement) | |
| 3500/000 | Bank Fees | is | R 1,500.00 | bank Fees / Document fees on HP Agreement | |
| 8400/000 | Bank Account – Main | bs | R 35,000.00 | Deposit Value Paid from Bank Bank (Capture this in Cash Book not Journal) | |
| 9500/000 | VAT Control Account | bs | R 28,000.00 | Only if VAT registered and Car is Commercial | |
| 9500/000 | VAT Control Account | bs | R 210.00 | VAT Portion of Doc fees / Bank Fees | |
| R 315,666.65 | R 315,666.65 |
The Account numbers above is example account numbers and not actual GL account numbers you might have. You might have to even create new GL Accounts before doing the above journals.
1st Month Debit Order Payment Journals and Cash Book
| Example Acc No. | Account Description | BS or IS | Dr | Cr | Description / Notes | |
| 8400/000 | Bank Account – Main | bs | R 5,082.43 | Debit Order of Monthly Payments (Captured in Cash Book) | ||
| 8400/000 | HP Finance Deal – Statement Value | bs | R 5,082.43 | Allocate Payment to this Account – This reduces total Owing on Finance Deal | ||
| bs | ||||||
| 3600/000 | Finance Charges – Expense | is | R 1,930.00 | Expense Actual Interest Value for that Month. See schedule on Page 1 | ||
| 9300/200 | HP Finance Deal – Deffered Finance | bs | R 1,930.00 | The Contra of actual Interest now reduces the Deferred Finance. | ||
| R 7,012.43 | R 7,012.43 |
2nd Month Debit Order Payment Journals and Cash Book
| Example Acc No. | Account Description | BS or IS | Dr | Cr | Description / Notes | |
| 8400/000 | Bank Account – Main | bs | R 5,082.43 | Debit Order of Monthly Payments (Captured in Cash Book) | ||
| 8400/000 | HP Finance Deal – Statement Value | bs | R 5,082.43 | Allocate Payment to this Account – This reduces total Owing on Finance Deal | ||
| bs | ||||||
| 3600/000 | Finance Charges – Expense | is | R 1,898.48 | Expense Actual Interest Value for that Month. See schedule on Page 1 | ||
| 9300/200 | HP Finance Deal – Deffered Finance | bs | R 1,898.48 | The Contra of actual Interest now reduces the Deferred Finance. | ||
| R 6,980.91 | R 6,980.91 |
3rd Month Debit Order Payment Journals and Cash Book
| Example Acc No. | Account Description | BS or IS | Dr | Cr | Description / Notes | |
| 8400/000 | Bank Account – Main | bs | R 5,082.43 | Debit Order of Monthly Payments (Captured in Cash Book) | ||
| 8400/000 | HP Finance Deal – Statement Value | bs | R 5,082.43 | Allocate Payment to this Account – This reduces total Owing on Finance Deal | ||
| bs | ||||||
| 3600/000 | Finance Charges – Expense | is | R 1,866.64 | Expense Actual Interest Value for that Month. See schedule on Page 1 | ||
| 9300/200 | HP Finance Deal – Deffered Finance | bs | R 1,866.64 | The Contra of actual Interest now reduces the Deferred Finance. | ||
| R 6,949.07 | R 6,949.07 |
Every month thereafter follows the above pattern and you need to just check the excel schedule that calculates the periods interest rate for you. Email us to send you this excel spreadsheet that calculates the Finance deals monthly values for you.
