Monday, March 5, 2012

Purchase of Vehicle Journal Entry

Accounting Question: If a company purchases vehicles for business, does it include the tax/title charges and the paint jobs for the business logos into the same entry as cost of vehicle?

Example Vehicle Purchase:

Truck 50
Tax/title 10
Alterations of vehicle for business purpose 20

Question: What would be the accounting journal entries for this type of vehicle purchase?

Answer to Vehicle Purchase Accounting Problem:

If the company purchases the vehicle for cash, look at the following accounting journal entries.

DEBIT: Truck - 50
DEBIT: Truck Expense - 30
CREDIT Cash - 80

If the purchase is made on credit would probably be a mix of cash and on account do to the title/taxes. I'm going to put the truck and alterations on account in my example.

DEBIT: Truck - 50
DEBIT: Truck Expense - 30
CREDIT Cash - 10
CREDIT: Accounts Payable - 70

No comments:

Popular Accounting Problems

The information on this site is for informational purposes only and should not be used as a substitute for the professional advice of an accountant, tax advisor, attorney, or other professional.