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May - last edited May
I am a small business owner and am trying my best to learn to do some of my accounting so my knowledge is fairly basic.
I have a question regarding the sale of a motor vehicle. I have tried to follow a few other solutions but it does not seem to be right to me.
I purchased the vehicle a few years ago for 13043.00 excluding gst it was coded to motor vehicle assets. I have been coding the depreciation to journals cr motor vehicle assets accumulated depreciation and dr depreciation. It was sold for the book value of 8021.46 excl gst and coded to sale of assets.
I created a sales invoice for the vehicle coding it to sale of assets. I think this is right.
The journal to show the sale of the asset is where i come un stuck.
I have a cr to accnt motor vehicle assets for 13043.00
I have a dr to accnt sale of assets for 13043.00
I have a dr to accnt motor vehicle assets accumulated depreciation for 5,021.54
I have a cr to accnt sale of assets for 5021.54
My amount totals to 18064.54, should this amount not come out at the vehicle sell price of 8021.46?
Should my dr to sale of assets be what i actually sold the vehicle for which was 8021.46?
Before I attmept to answer this a question - was the vehicle financed.
Secondly - when it comes to creating a journal for this entire process - unless you are really experienced MYOB user with years of use of doing things like this the process can be simplified by breaking it into small steps - you are trying to eat a MacDonalds burger in 1 mouthful and unfortunately it is choking you.
Also you have mentioned gst excl but it is fully part of this process and cannot simply be ignored and hoped to sort itself out - are you registered for GST?
The vehicle was not financed.
Yes I am GST registered and am fairly sure I have accounted for this properly along the way. I just used those figures in this post to try and simplify things but maybe I have confused the issue more. The GST inclusive price of vehicle purchase was 15,000. GST inclusive sale price is 9224.68.
I have always used the GST excl price in my journal entries for the depreciation, is that not correct?
Should also add that I have claimed depreciation for the last two years with journal entries. One year is for 2739.02 and the other is for 2282.52.
I always have to think these through even though I have done these for years.
Working on your new figures - GST need needs to be always considered and although the asset value in M/V @ cost and m/v deprec are excl figures - you are selling an inventory object - and I sue these simplified thinking processes to get things right.
1st step is move the car out of the Asset register into a suspense sale asset account I use (using your actual figures
1 - M/V @ cost credit 13636.36 n-t
1-M/V deprec debit 5021.54 n-t
1- sales asset - suspense debit 8614.82 n-t
The book value excl is 8614.82 or 9476.30 incl (whereas you sold it at 9224.68 incl which is a slight lost on book value.
If you look at your chart of accounts it will show (ignoring the decrease in m/v at cost and increase in deprec total) the Sale Asset suspence will be debit $8614.82
Whilst it seems a simplistic approach and you might be tempted to do it in 1 process as you see that comes undone when it doesn't ad up.
Now you need to sell this inventory item (car) and show money deposited to a bank account. That is where the combined journal comes undone - you didn't immediately sell it in MYOB terms (which is what MYOB is about - no the real world that you sold your car).
So you now have to cdebot a bank account the GST incl amount you received from the car and only then can you say you sold it remembering to include all this info in the memo so that if it is wrong you have the info to correct it.
2nd journal - move all this sales
1- sale of asset suspense credit 8614.82 n-t
4 - disposal of asset debit 8614.82 n-t
GST inclusive box ticked and sale box ticked at top of journal (this is a sale not a purchase hence GST goes to sales)
1 - bank account debit $9224.68 n-t
4 - asset disposal credit 9224.68 GST
The net result is that the 4 - disposal account will show a net -228.75 loss on the sale of this item
I think I have this right - someone will check it and correct it but even I had to go through this from 1st principles to make it right in MYOB.
Journals should be done to create the outcome you expect - not created in a single action and then trying to fix it when it is wrong.
The same things happens when I see someone trying to enter a car or asset financial in a single journal - which is possible but becomes a jumble if you do not understand what you are actually doing.
I believe I have thrown you a curve ball here by not informing you I am from NZ and our GST is charged at 15%. I think I can work through what you have shown me though and will have a crack at recifying things.