Journals/Entries for van sale

Accounting
1

Hi,

I have a van in the books as follows:

  • The van is tracked with its purchase price P as an asset in (0050) Motor Vehicles.
  • The loan L (net loan excl. interest) itself is tracked in (2321) Van loan
  • Monthly payments are automatically split between paying down (2321) Van loan and (7903) Loan Interest Paid

Due to unforeseen circumstances the company needs to wind down, and therefore the van has been sold:

  • The van has been sold at price S to a service provider (at a loss, i.e. S < P; no depreciation has been recorded))
  • A finance settlement agreement has been obtained form the lender for early repayment. The settlement covers amount payable, rebate, and a settlement figure F, which is the net loan plus some interest: R = L + I
  • The service provider took on the finance settlement, and the difference between sales price S finance settlement F has been paid to the service provider.
  • The service provider’s purchase invoice includes the following line items:
    • Sales price S
    • Finance settlement F
    • Transaction fee T
    • Balance transfer B = S - F - T
    • Amount payable is therefore £0.00

How do I properly record this in the books so that:

  • the loan is settled,
  • the van taken off the books,
  • finance settlement interest is tracked as loan interest paid, and
  • the loss of van sales is also tracked as a sales loss

Many thanks!

2

I figured it out - maybe this will help others:

Normally, a van sale would be accounted for as described in Sale of vehicle - #3 by Badger

Since the van sale was linked together with the finance settlement by the ocmpany purchasing the car, including a balance payment to the company, all other attemts with recording this failed except the following.

1. Create a purchase invoice

Create a purchase invoice adding three entries as follows:

  • Van sale price S against nominal “(0050) Motor Vehicles”
  • Finance Settlement F against nominal “(2321) Van purchase financing” (or similar in the 23xx range to show up as long-term loan)
  • Transaction Fee F against nominal “(5000) General Purchases” ( I couldn’t find anything better fitting)

This creates an invoice with an amount to pay that is identical to the balance transfer B - tag the balance transfer from the current account to this invoice.

Attach the original invoice for record keeping, and then this step is done.

2. Create the Finance Settlement journal

To balance the long-term loan nominal to £0.00, add a simple journal to record the interest paid as follows:

  • Debit from “(7903) Loan Interest Paid”
  • Credit to “(2321) Van purchase financing”

3. Take the van off the books

As indicated above, normally, a van sale would be recorded against “(4200) Sales of Assets”, and then the full asset value (minus depreciation) drawn down to the same SoA nominal, usually creating a loss in the income nominal.

Since Quickfile didn’t allow me to use “Sale of Asset” in the purchase invoice I had to create in step 1 above, I had to tag the sale against nominal “(0050) Motor Vehicles” instead. As a consequence the journal to take the van off the book and create the loss is slightly different:

  • Debit from “(4200) Sales of Assets”
  • Credit to “(0050) Motor Vehicles”

Conclusion

I had to work around some Quuckfile limitations, so the transactions and journals recorded are different from what normally would happen, but the result is the same:

  • The finance agreement is paid off
  • The van is taken off the books
  • The loss is recorded appropriately in the Sale of Assets nominal.

I attached all relevant invoices and agreements, including plenty of notes in Quickfile so that everything is properly documented.