Depreciation how do you put this in the journal i.e. Van value £1000 in debit column, when I put in depreciation @ 20% (£200) in the credit column, journal wont save as balance is out by £800.
can find out how this works
There are two depreciation nominal codes for each asset type, one on P&L and one on the balance sheet. You need to credit the balance sheet code (0051 for vehicles on my QuickFile account) and debit the matching P&L code (8003), which will show that year’s depreciation as a cost on P&L and will reduce the net book value on the balance sheet by the same amount.
Ian, thank you that works perfectly, could you help out on another issue, I have loaded QuickFile entries
from the beginning of year (last year 6/4/2018)
Entries are as follows
Journal Debit column Credit Column
(1200)Current account £1767 (9998) Suspense Account £1765
(1230) Petty cash £1037 (9998) Suspense Account £1037
(0020) Plant and Machinery £859 (9998) Suspense Account £859
(0050) Motor Vehicles £2093 (9998) Suspense Account £2093
(0030) Office Equipment £326 (9998) Suspense Account £326
I now want depreciation on (20/30/50) at a cost of £665 have I put these assets in the wrong account
Your help is much appreciated
Dave
As I understand it (I’m not an accountant, this is just how it’s been explained by mine), the original purchase price of each asset should be a debit on the 0020/30/50 code and the accumulated depreciation goes as a credit on 0021/31/51 - when you view the balance sheet in QuickFile it nets off these pairs of codes and shows the net book value.
When you enter depreciation for a given year you do it by crediting 0021/31/51 and debiting 8001/8004/8003. The credits reduce the NBV on the balance sheet and the debits show as overheads on your P&L for that year.
If/when you sell or otherwise dispose of an asset, it’s at that point that you have to reverse the original purchase price from the 00x0 code and the total accumulated depreciation from 00x1, and put the balancing entry - the NBV - on “sale of assets”. Anything you receive for the asset should also go to “sale of assets” and the final total on that account will be the gain or loss on disposal (depending whether you sold it for more or less than the NBV at the time).
Finally, you will need to move the suspense account balance to a more appropriate place if you want an accurate P&L for 2018/19, I guess “retained profit” is probably the easiest place to put it but check with an accountant if you want to be sure.
Thank you for your reply I stuck at it and sorted it out and it seems to work and make sense. Like you I am not an accountant. I did a double entry booking course in the forces over 25 years ago and understand the concept it is just a little tangled when you don’t have the whole book in front of you anyways thanks again.
Dave
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