Case Study.... Help!!!

[sarahuk3]

Hi Everyone,

Just a quick question about posting journals in the main ledger for the acquisition of a new car.

this is what i have that i am working on:

Invoice: Hylex Motors

VX04 TMS 10,900.00
VAT 1,907.50
12,807.50
Excise Duty (12months) 165.00

12,972.50
less p/e -1,850.00
11,122.50

the company is not able to recover input vat on the purchase of a new car, so when i am posting in the main ledger am i using the net value of 10,900?

Thank you!!

Sx

[CJC]

As you rightly say VAT is not recoverable on the purchase of cars. Thus, the cost of the car to the business is the *gross* amount and it is this that needs to be entered in the ledger. If the vehicles was, say, a van, the cost would be the net value and the VAT would be separated off with a corresponding double entry in the VAT account.

I've an example here (http://cjcnet.net/wiki/tiki-index.php?page_ref_id=64) which might be of some use.