In hire purchase,for transfer of interest& depression to p&l A/c what is the entire and which rule is applicable to that?

Thank you for the invitation.

Personal accounts:  Debit the receiver, Credit the giver.

Real Accounts:

Real accounts involve machinery, land and building etc. ... Similarly when you credit what goes out, you are reducing the account balance when a tangible asset goes out of the organization. Debit All Expenses And Losses, Credit All Incomes And Gains. This rule is applied when the account in question is a nominal account.

The accounts relating to all assets and properties are called real accounts. Personal Account: The accounts relating to induviduals, firms, associations or companies are known as personal account. Nominal Account: The accounts relating to expenses, losses, incomes and gains are known as nominal accounts.

The transaction is based on the rules of Hire Purchase Act and Hire Purchase Act (amendment) ..... To transfer interest expense to Profit and Loss Account. 

If you purchase a fixed asset on hire purchase, to keep track of the hire purchase ... you must record the purchase of the asset against a bank account created ...

Hire purchase (HP) or leasing is a type of asset finance that allow firms or individuals to ... Assets listed on a firm's balance sheet can include tangible items such as ... On completion, ownership of the asset transfers to the customer. It is important to note that the accounting and tax treatment of leases varies 

Car hire purchase deals are where you hire the car with an option to ... After three years you can take ownership of the vehicle, paying a transfer fee of £. .... a similar service, yet it's only for its current account customers at the moment

he decision to buy, hire purchase (HP) or lease an asset will generally depend ... is deducted as an expense in the profit and loss account, which in turn reduces the ... Payment of this nominal fee transfers title of the asset and brings the legal .

Hire purchase:

There are two ways to record payments to the Hire Purchase company: Credit the full amount paid (in this case.) to the hire purchase company liability account and create a journal to reduce and expense off the hire purchase interest. Make all the relevant entries at the time of recording the payment.

Amortised cost and effective interest method. When a ... of the asset or liability. We'll take a look at an example using a hire purchase contract that illustrates this theory.

Step1 - Create the new nominal codes

Before recording the hire purchase agreement, you must ensure that you have created the required nominal codes. If using the Sage default nominal ledger structure, we suggest you use the following codes:

Nominal Code

Name

Management Report

Section of Management Report

Motor Vehicles

Balance Sheet

Fixed Assets

Purchase Tax Control

Balance Sheet

Current Liabilities

Hire Purchase

Balance Sheet

Current Liabilities

Bank Account

Balance Sheet

Current Assets / Liabilities

Licences

Profit and Loss

Overheads

Misc Motor Expenses

Profit and Loss

Overheads

*

Equipment hire and rental

Profit and Loss

Overheads

Hire Purchase Interest

Profit and Loss

Overheads

*This code is only required in cases of lease hire.

Create a nominal code

1. Click Nominal codes then click the New/edit drop-down and click New.

Sage Accounts (v) - Click the Modules menu then click Nominal Ledger and click Record.

1. Complete the record as required.
2. Click Save then click Close.

Remember to check the Chart of Accounts to ensure any new codes are included in the correct sections of the management reports.

Step2 - Record the hire purchase figures

The hire purchase figures are recorded by posting a journal. This updates the relevant nominal codes and where relevant the VAT Return. The journals posted depend upon whether a part exchange was involved.

Post the hire purchase figures without part exchange

Post the hire purchase figures, including part exchange

Step3 - Post the monthly repayments

Each time the hire purchase and interest repayments are paid, post a bank payment to reflect this. Each monthly repayment is made up of two amounts:

• Repayment of hire purchase - Post to, Hire Purchase Account, with T9 tax code.
• Payment of HP interest - Post to, Hire Purchase Interest, with T9 tax code.

It's possible to set these repayments as recurring entries.

Post a bank payment

1. Click Bank accounts then click the Payments drop-down and click Bank payment.

Sage Accounts (v) - Click Bank then click Payment.

1. Enter the relevant information into the Bank Payments window, for example:

Bank

Date

Ref

N/C

Dept

Details

Net

T/C

Tax

Due Date

Ref

Department

Hire purchase repayment

.

T9

0.

Due Date

Ref

Department

Interest repayment

T9

0.

1. Click Save then click Close.