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nighttax
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Hello James

The way a good accountant (I say that because I have seen some very bad work from accountants) would record the vehicle purchase is as follows.

In the Liabilities accounts section you create 2 accounts.
1- vehicle loan (Wpac van loan)
2- Unexpired Interest on Wpac van loan

In the Assets accounts section you create 2 asset account
3- Motor Vehicles
4- Borrowing Costs

The journal you enter will be as follows: (I assume you had no deposit)

Credit theLiability Loan account 1 with (the Amount borrowed (per the loan document)+ the total interest payable (per the loan document)
Debit the Liability account 2 with the total interest payable amount from the loan documents.

Debit the Asset account 3 with (the cost of the vehicle (per the dealer invoice) minus the GST amount (per the dealer invoice)
Debit the GSt account with the GSt amount per the dealer invoice.
Debit the Asset account 4 with the borrowing costs amount per the loan documents.

That journal will balance if it is done correctly.

Now every time you make a payment on the loan – the transaction will be

Credit the bank account in xero and Debit the Liability loan account 1 with the full amount of the payment. (that’s right it is not an expense at this stage)

At the end of the year the accountant will amortise the loan interest and borrowing costs and let you what to journal as the amounts will vary each year.

Regards
Evan