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April 1, 2023
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Journal entries I have a vehicle asset of $18000.00 on books and accumulated depreciation $18000.00. Vehicle totaled I recv'd insurance check for $22970.11. Bought new vehicle using the insurance check and took out loan for $25000.00.

  • April 1, 2023
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Journal Entries. I have a vehicle asset $18000.00 and accumulated depreciation $18000.00. Vehicle totaled and I recv'd insurance check for $22970.11. I purchased a new vehicle with the insurance porceeds and took out a loan from the bank for $25000.00. Can someone please tell me the entries to make to account for this.

Best answer by Rustler

Create an income account called Gain/loss on assets
journal entries
debit accumulated depreciation, credit gain/loss for the balance in the accum depreciation account
debit gain/loss, credit the fixed asset account for the balance in the fixed asset account
deposit the check and use the gain/loss account as the source account for the deposit

 

create the fixed asset accounts for the new vehicle and its accumulated depreciation

enter the down payment in the bank account and use the fixed asset account as the expense (reason) for the payment

 

create a long term liability account for the  loan
journal entry
debit the fixed asset account and credit the loan liability account for the amount of the loan

1 reply

Rustler
RustlerAnswer
April 2, 2023

Create an income account called Gain/loss on assets
journal entries
debit accumulated depreciation, credit gain/loss for the balance in the accum depreciation account
debit gain/loss, credit the fixed asset account for the balance in the fixed asset account
deposit the check and use the gain/loss account as the source account for the deposit

 

create the fixed asset accounts for the new vehicle and its accumulated depreciation

enter the down payment in the bank account and use the fixed asset account as the expense (reason) for the payment

 

create a long term liability account for the  loan
journal entry
debit the fixed asset account and credit the loan liability account for the amount of the loan

tew2Author
April 3, 2023

I was over thinking it. Thank you!