When a business purchases a new asset such as a motor vehicle, it is quite common to trade in or part exchange and old asset to satisfy part of the new asset purchase cost.
Buy Equipment with Down Payment in Cash
A business buys networking equipment to the value of 12,000 and funds the purchase with a down payment in cash of 3,000 and the balance on credit terms form the supplier of the equipment.
The double entry bookkeeping is recorded using this equipment purchase compound journal entry.
Equipment Purchase via Loan Journal Entry
A business purchases equipment to the value of 10,000 for use in its production facility and pays by means of a business equipment loan.
The double entry bookkeeping is recorded using this equipment purchase via loan journal entry.
Fixed Assets Journal Entries
The fixed assets journal entries below act as a quick reference, and set out the most commonly encountered situations when dealing with the double entry posting of fixed assets.
In each case the journal entries show the debit and credit account together with a brief narrative.
Disposal of Fixed Assets Journal Entries
When a business has a disposal of fixed assets, the original cost and the accumulated depreciation to the date of disposal relating to those fixed assets must be removed from the accounting records. A disposal of fixed assets can occur when the asset is scrapped and written off, sold for a profit to give a gain on disposal, or sold for a loss to give a loss on disposal.
Fixed Assets Basics in Accounting
Fixed assets have a long life and are for use within the business and not held for resale. They are not part of the trading inventory, and are not involved in the day to day working capital cycle of the business so are not readily convertible into cash.
Fixed Assets Purchase Incurring a Liability
You decide on a fixed assets purchase of new machinery for the business of 5,000 and are able to obtain credit from the Supplier.
Fixed Asset Purchase with Cash
What are the bookkeeping entries if you decide on a fixed asset purchase of new furniture for the business for 2,000 using cash.