Scenario:
SAZZ
Ltd has just bought a vehicle for £50,000 for company use and will pay for it
next month. What will be the double entry posting for this?
Ltd has just bought a vehicle for £50,000 for company use and will pay for it
next month. What will be the double entry posting for this?
Double entry posting:
DR:
Vehicle account £50,000
Vehicle account £50,000
CR:
PLCA £50,000
PLCA £50,000
Reason:
Thevehicle account has been debited because vehicles are increasing and if an
asset is increasing, we debit the relevant asset account and we have credited Purchases
ledger control account (PLCA) because the company hasn’t paid for the vehicle
and the full amount is currently outstanding and this is a liability. Hence the
liability is increasing, and if a liability is increasing, we credit the
relevant liability account.
REMEMBER:
DEAD/CLIC
N/B:
PLCA
is also called Creditors Control Account/ Trade Payables Account
is also called Creditors Control Account/ Trade Payables Account
Yours Sincerely,
The Friendly Team
The Friendly Team
The Training Place of Excellence Limited