Hi,
I need to pass the accounting entry for the below transaction.
VEHICLE LOAN TAKEN FROM “X” BANK AND WE ISSUED PDC FROM “Y” BANK. WHAT ARE THE ACCOUNTING ENTRY TO BE PASSED.
DR: FIXED ASSETS - VEHICLE
CR: VEHICLE LOAN X BANK
OR
DR: FIXED ASSETS - VEHICLE
CR: PDC - Y BANK
KINDLY ADVISE.
What is PDC?
(And please STOP SHOUTING, we can hear you fine in mixed case…)
PDC - means - POST DATED CHEQUE.
SHOUTING? WHAT DO YOU MEAN? WHO IS SHOUTING?
Posting in all capital letters on an Internet forum is generally construed as “shouting” would be in a face to face conversation. People are more likely to read your posts and take your questions seriously if you turn off the caps lock.
Turning to your actual question, I believe the usual approach to handling loans in QuickFile is to create a “bank account” in the loan accounts category. You would create a purchase invoice for the vehicle assigned to the appropriate fixed asset code, then mark the purchase as paid from the loan account. This leaves the loan account showing as overdrawn as it’s a liability from you to the bank. Repayments on the loan are transfers from your current account to the loan account, interest charges are “money out” of the loan account tagged to an expense code.
You can model cheques the same way, with a dummy “cheque holding account” bank account. When you write a cheque to pay for something you make the payment out of the holding account, when the cheque clears on your current account that is a transfer to the holding account to clear the negative balance.
Does that answer your question?
P.S. I’m not an accountant, if you want advice specific to your own circumstances you should always check with your own accountant who knows your situation in detail.
Thank you, well noted.