To Record the Hire Purchase Agreement

1. From the Sage Line 50 toolbar, click Nominal.

2. Click Journals.

The Nominal Ledger Journal Entry window appears.

3. Open the Edit menu and choose the Recall option. Choose the HIREPUR.NJR skeleton journal and post the following journal.

Note: These figures correspond to the example in the Hire Purchase Agreements topic. Replace these figures with your own values.

		Tc	Debit	Credit
0050	Motor vehicles	T9		4000.00
4200	Sale of Assets	T9	4000.00

The value of the old fixed asset (in this example the vehicle) has now been removed from your accounts.

		Tc	Debit	Credit
0051	Motor vehicle Depreciation	T9	3000.00
4200	Sale of Assets	T9		3000.00

This removes the accumulated depreciation amount for your old asset from your accounts.

		Tc	Debit	Credit
0050	Value of new vehicle	T1	7007.51
2201	Purchase VAT Control	T1	1226.32
7302	Licences	T9	150.00
7304	Misc. motor expenses	T9	75.00
2310	HP liability	T9		8458.83
2310	HP liability	T9	500.00
1200	Bank current account	T9		500.00
2310	HP liability	T9	1300.00
4200	Sale of assets	T9		1300.00

These journals show the purchase of the new asset, the road tax, administration fees, the deposit paid, and the part exchange value received.

The value outstanding on the HP Liability account is ú6658.83 that will be reduced monthly by your monthly repayment value. The value remaining on the Sale of Assets account is ú300(CR) which will show as a profit on the sale of the asset in your profit and loss account.

4. Click Save.

Now that the hire purchase agreement for the new vehicle has been entered into your accounts program, you should now set up a recurring entry for your monthly bank payments for monthly loan repayments plus the interest charges.

Your next step...

To Record the Monthly Loan Repayment

To Record the Monthly Hire Purchase Interest Charges