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RRB26's avatar
RRB26
10 months ago

Statement of Adjustments (against vendor) for purchase of a business

I have an unusual situation I am hoping someone can help with.  We purchased a branch of a business.  The business we have purchased from has offered Vendor Finance (an unusual enough transaction its...
  • Mike_James's avatar
    Mike_James
    10 months ago

    Hi RRB26 , a journal entry which debits the loan account and credits a liability account for holiday pay will do the job here. Date as at the agreement date or the beginning of your file. This new liability being only 75% of your actual liability you may wish to increase that, for which a journal entry debiting your current expenses and crediting holiday pay liability will be required. However, there could be tax implications around these entries, so you should confirm them with your accountant. 

Mike_James's avatar
Mike_James
Ultimate Cover User

Hi RRB26 , a journal entry which debits the loan account and credits a liability account for holiday pay will do the job here. Date as at the agreement date or the beginning of your file. This new liability being only 75% of your actual liability you may wish to increase that, for which a journal entry debiting your current expenses and crediting holiday pay liability will be required. However, there could be tax implications around these entries, so you should confirm them with your accountant. 

RRB26's avatar
RRB26
10 months ago

Hello Mike,

 

Thank you, that makes perfect sense.  I will as you say discuss it with our Accountant to if there are any implications of doing this.  Thank you for your help. 

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