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• # 71212
• Mon 23 May 2011 08:25 AM

Hi,

I am aware of the journal entry for the disposal of a fixed asset
Cr Fixed asset cost
Dr Depreciation

However, what would be the correct entry on sage if I had a Sales invoice for the sale of the old asset and a purchase invoice for the purchase of the new asset?

Thanks

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• # 71221
• Mon 23 May 2011 02:18 PM

Hi

Sales invoice - code to fixed asset accounts (00**), don't forget to journal for profit/loss made on the sale of the asset
Purchase invoice - code to fixed asset account (00**).

Helen.

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• # 71223
• Mon 23 May 2011 02:29 PM

Thanks thats a great help
So after inputting both invoices I would do the following:

Cr Asset (cost)
Dr P & L Disposal a/c

Cr P & L dISPOSAL a/c
Dr accumulated Depn

I would then take the difference between the NBV & Net amount on Sales invoice and do the following but not sure what to post as usually it would be
Dr Bank
Cr P & L Disposal

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• # 71224
• Mon 23 May 2011 02:49 PM

Agree on first 2 journals proposed but my brain doesn't want to work, so i'll have to hand over answering the 3rd journal suggestion to someone else....

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• # 71225
• Mon 23 May 2011 02:56 PM

thank you so much for your help. If anyone else can help with the last journal it would be much appreciated!

Edited at 23 May 2011 03:05 PM GMT

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• # 71231
• Mon 23 May 2011 03:48 PM

leegemma900 said:

“

Thanks thats a great help
So after inputting both invoices I would do the following:

Cr Asset (cost)
Dr P & L Disposal a/c

Cr P & L dISPOSAL a/c
Dr accumulated Depn

I would then take the difference between the NBV & Net amount on Sales invoice and do the following but not sure what to post as usually it would be
Dr Bank
Cr P & L Disposal

”

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• # 71232
• Mon 23 May 2011 03:53 PM

thank you Jason.

Can I just confirm that I still need to input the sales invoice into the sales ledger as well as completing the 3 Journals and then the profit/loss on disposal journal?

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• # 71235
• Mon 23 May 2011 04:39 PM

Should you be raising the invoices on the sales/purchase ledger for this exam? Only reason I ask is that when I did the level III mock I lost a mark for doing using the sales and purchase ledger for fixed assets. I think they want you do the journals and I could have lost marks on this when I did it this way in the exam rather than doing it all by journals.
Anyone else any thoughts?

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• # 71239
• Mon 23 May 2011 07:15 PM

It gives you a purchase vat invoice for new asset and a sales vat invoice for sale of used asset.it says neither are reflected in trial balance

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• # 71243
• Mon 23 May 2011 10:05 PM

I worked for an employer who recorded all their asset purchases through journals...it didn't sit comfortably with me, so I convinced them to record them via supplier invoices, and use the correct VAT code. The external Auditor seemed happy about that.

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• # 71245
• Mon 23 May 2011 10:23 PM

Hi All
Now I'm not sure how to approach this for an exam so please follow others' guidance, but in the real world I would enter into sage as follows:-

For the disposal:-
Cr fixed asset account with the orignal cost of the asset
dr P & L asset disposal account with the cost
dr accumulated depreciation with the value of the depeciation for this asset
cr P&L asset disposal account witht he accumulated depreciation.
or you could just post the difference (the NBV) to the disposal account.

If you raise a sales invoice and (allow credit terms) for the disposal, post it to the ssset disposal account.  or if no invoice is raised post the bank receipt to the disposal account. In my opinion you would use the sales ledger to ensure the unpaid invoice shows as a debtor.
This will place a credit entry in the asset disposal account.

The resulting balance in the disposal account will either be a loss (sold for less than NBV) or a gain (sold for more)
No further postings should be required.

The purchase of a new asset would be a seperate transaction althogether and would just be posted either as a purchase invoice to the calance sheet asset account or as a bank payment to the asset account.
 
I hope I haven't confused you more. and hope it helps

 

• Anne P
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• # 71246
• Tue 24 May 2011 07:14 AM

This question is about the exam!
Checked the mock exam answers I have and its not posted to the sales and purchase ledgers. It's bank payment and receipt. Do you need to print an audit trial?  
Personally I feel the ICB need to make it clearer on how to deal with this in the exam, should it matter how it's done? 

Edited at 24 May 2011 07:18 AM GMT

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• # 71247
• Tue 24 May 2011 07:19 AM

There has been no money paid or received though. They are just invoices. It does not ask for an audit trail but after all adjustments are made it asks you to print a new P & L and Trial balance.

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• # 71270
• Tue 24 May 2011 11:49 AM

Glad they've changed it since I did it!! 
 

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• # 112372
• Tue 16 Feb 2016 03:15 PM

Hi 

If i am doing a journal for the purchase of new computers for £1800 inclusive of vat is this journal correct? I cannot remember if you have to take the vat into consideration or just post the whole figure?

CR Sundry Creditors 1800
DB Computers 1500
DB Vat 300

or

CR Sundry Creditors 1800
DB Computers 1800


Many thanks
Louise  
              

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• # 112373
• Tue 16 Feb 2016 04:22 PM

Hi Louise,

It's not clear why you would use a journal for this transaction,as it seems to be a credit purchase.

In that situation, use the accounts payable module to enter the invoice against the supplier. If your client is VAT registered, enter the VAT separately. The entry posts as

Dr Computers £1,500    Dr VAT £300       Cr Payables   £1,800

If not VAT registered, then post the whole value to the asset account as £1,800

A journal should really only be used if the original entry was miscoded.

• Kind regards,
  PeteL  

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