Software: MoneyWorks accounting software
When purchasing a motor vehicle, often we made a down payment (deposit) and arrange the balances with a car loan. Assuming you purchase a motor vehicle at S$80,000.00 (S$85,600.00 with GST) and you paid S$10,000.00 as a down payment and take a loan for the remaining amount.
Use the Purchase Invoice transaction to record the bill received from the “Car Company” for the vehicle purchased.
Debit Vehicle (Fixed Asset account type): 80,000.00
Debit GST Paid (Input Tax): 5,600.00
Credit Accounts Payable: 85,600.00
Next, Use a reverse Purchase Invoice to transfer the amount owed to the “Car Company” to the loan account. The double entry will be:
Debit Accounts Payable: 75,600.00
Credit Loan (Current Liability type of account): 75,600.00
Then, use a Payment transaction to pay the outstanding amount (the down payment) of 10,000.00 and knock off the reverse purchase invoice of 75,600.00 at the same time.
Debit Accounts Payable: 10,000.00
Credit Bank: 10,000.00