Assume we buy a new car ON 26/02/2020, Total 30,000.00, going to repay within 5 years.

Dt Motor Vehicle

Dt Registration Fee

Cr Deposit

Cr HP Creditor

26/02/202X (LET SAY WE PURCHASE IT ON THIS DATE, BASED ON AGREEMENT)

Dt HP Interest Suspenses (Liability for all five years)

Ct HP Creditor

The total interest for all 5 years (yet to be paid) amount

–

31/12/20XX

Dt HP Interest (9000/XXX), write off as expenses

Ct HP Interest Suspenses (reduced liability at year end)

–

EVERY MONTH, FOR THE UPCOMING 5 YEARS

07/4/202X DT HP Creditor

07/4/202X Ct Cast at Bank

07/5/202X DT HP Creditor

07/5/202X Ct Cast at Bank

07/6/202X DT HP Creditor

07/6/202X Ct Cast at Bank

07/07/202X DT HP Creditor

07/7/202X Ct Cast at Bank

07/8/202X DT HP Creditor

07/8/202X Ct Cast at Bank

07/09/202X DT HP Creditor

07/9/202X Ct Cast at Bank

07/10/202X DT HP Creditor

07/10/202X Ct Cast at Bank

07/11/202X DT HP Creditor

07/11/202X Ct Cast at Bank

07/12/202X DT HP Creditor

07/12/202X Ct Cast at Bank