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This is the first in a series of articles on accounting
and The Truckers Helper
. We are going to answer our most common accounting
questions in these articles. Our first issus is purchasing a truck and how to
enter the purchase, loan and ongoing payments in the accounting section.
PURCHASING A TRUCK
ACCOUNTING PRINCIPLES:
When you purchase a truck you create
an ASSET, the truck itself, and a LIABILITY, the loan for the truck.
The only things associated with the purchase which are EXPENSES are any taxes, licenses, etc. The down
payment on the truck is NOT AN EXPENSE, it is applied againt the liability.
Here's an example:
| TRUCK PRICE | =
| $100,000
| | SALES TAX | =
| $ 6,000
| | LICENSE | =
| $ 1,500
| | TOTAL COST | =
| $107,500
| | DOWN PAYMENT | =
| -$ 20,000
| | LOAN AMOUNT | =
| $ 87,500
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This goes
into your books as:
| ASSET | =
| $100,000 | the initial cost of the truck
| | LIABILITY | =
| $ 87,500 | the loan amount
| | EXPENSE | =
| $ 7,500 | tax & license
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PROGRAM ENTRY:
To enter your truck in the progam you will first add the
truck to the program and create the liability and asset accounts.
- 1. Go to Truck Maintenance, click ADD TRUCK and
complete the Q&A to add the truck.
- 2. Click TRUCK INFO, to
access the Truck Information screen. Fill out the truck information including the
PURCHASE
PRICE and loan information. Click SAVE & EXIT. NOTE: If this is a truck
you already had and are now adding to the program enter the BOOK
VALUE of the truck as the Purchase Price.
- 3. The program will ask if you want to create a
Liability Account. Answer YES to create the Liability and Asset accounts for
this truck automatically. NOTE: if you got a loan from the bank for more than the value of the truck do
not use this process to creat the Liability, see #2 below.
ADJUSTMENTS:
Once you have the Asset and Liability accounts created you will need to enter the other items
that affect this transaction. How this is done will depend on how your DOWN PAYMENT was handled.
1. CASH DOWN PAYMENT: Show this as a PAYMENT on the Liability from the
account you took the cash from. This is done as a single entry in the Income
& Expense section.
- TYPE = LIABILITY
- AMOUNT = Amount you Paid Down (do not include taxes, etc.)
- PAID BY = The type of account you paid this from (CHECK, CASH, etc)
- PAYMENT ACCOUNT = The account you paid this from.
- CHARGE TO ACCOUNT = The name of the Liability Account.
2. LOAN FROM A BANK:
if you got a loan from the bank for the cost of the truck, taxes, fees, etc.
then setup the liability using a single entry as shown below. You will then
make individual entries to pay for the Asset, taxes, fees, etc. to cover the purchase.
- TYPE = LIABILITY
- AMOUNT = Amount you received from the bank.
- PAID BY = N/A
- PAYMENT ACCOUNT = The account you deposited the loan into.
- CHARGE TO ACCOUNT = The name of the Liability Account.
2. TRADE IN: if you trade in your old truck you will need to TRANSFER the
value from your old trucks ASSET account and apply it against the LIABILITY
ACCOUNT for the new truck. In The Truckers Helper you cannot directly transfer
money from an ASSET to a LIABILITY, so this is done as 2 seperate tranactions.
- 1. Click QUICK ENTRY/ASSET/SALE - the Sale of Asset box will appear.
- 2. Select the Asset Account for the FROM account.
- 3. Select the CASH account for the TO account
- 4. Enter the date, amount of your trade in value, etc.
NOTE: this simplified transaction is based on receiving the same amout as
a trade in as you have the asset on your books for. If you received MORE for
your trade in than you had the in your asset account you will need to transfer
the difference FROM CAPITAL GAINS TO the ASSET ACCOUNT. If you received LESS
than your asset you will need to transfer the difference FROM THE ASSET ACCOUNT
TO THE CAPITAL GAINS ACCOUNT.
The program will create entries for the Sale of the asset and depost the
amount you received as TRADE IN in your CASH account. Next you need to show this
as a PAYMENT from your CASH account against the LIABILITY. This is done as a
single entry on the Income & Expense page.
- TYPE = LIABILITY
- AMOUNT = Amount of your trade in value.
- PAID BY = CASH
- PAYMENT ACCOUNT = CASH
- CHARGE TO ACCOUNT = the LIABILITY account
EXPENSES:
The expenses associated with this transaction are any taxes and licenses which
you paid at the time of the purchase. These are entered as EXPENSES in the normal
manner and charged to the appropriate Expense Account.
REPORTS
Profit & Loss Report - payments made on the principal of a
liability are not an EXPENSE and are not shown on the Profit & Loss report.
You expense for the truck is taken as a deduction for DEPRECIATION against the ASSET. The INTEREST you pay is
an EXPENSE and will be shown on your Profit &Loss Report.
BALANCE SHEET - the Balance Sheet will reflect payments which have
been made on LIABILITIES and will reduce the amount of the LIABILITY by the
amount of the payments made on the PRINCIPAL BALANCE. The ASSET
will also be reduced whenever a DEPRECIATION deduction is taken.
Have a comment, suggetion or question? Post it to our forum THE TRUCKERS HELPER FORUMS
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