358 Accumulated Depreciation of IT – Software
Liabilities
Contra Assets
Synopsis
Account 358 is established to record the total Depreciation applied to IT Software purchased or licensed by the dealership for use in the automobile business.
|
Debits |
Credits |
|
1. The total amount of Depreciation applied to IT computer Software when such Software is sold or otherwise disposed
|
1. The monthly provision for Depreciation applied to IT software |
Example 1
Record the monthly provision of $1,215 for depreciation of IT Software. The monthly expense is pro-rated to each department as shown in the example below.
Journal: Standard Entries Journal
|
Entry: |
|
Debit |
Credit |
|
Account 091-01 |
Depreciation – Equipment – New Vehicles Department |
$235 |
|
|
Account 091-02 |
Depreciation – Equipment – Used Vehicles Department |
185 |
|
|
Account 091-03 |
Depreciation – Equipment – Lease & Rental Department |
50 |
|
|
Account 091-04 |
Depreciation – Equipment – Finance & Insurance Department |
100 |
|
|
Account 091-05 |
Depreciation – Equipment – Mechanical Department |
235 |
|
|
Account 091-06 |
Depreciation – Equipment – Body Shop Department |
25 |
|
|
Account 091-07 |
Depreciation – Equipment – Parts & Accessories Department |
200 |
|
|
Account 091-09 |
Depreciation – Equipment – General & Administrative |
185 |
|
|
Account 358 |
Accumulated Depreciation – IT Software |
|
$1,215 |
Example 2
Record the disposition of computer software no longer used. The original capitalized cost is $4,286 and the software has been fully depreciated.
Journal: General Journal
|
Entry: |
|
Debit |
Credit |
|
Account 358 |
Accumulated Depreciation – IT Software |
$4,286 |
|
|
Account 288 |
IT- Software |
|
$4,286 |
Note:
Professional tax and accounting advice should be obtained regarding the proper method of depreciation, which can be applied to IT computer Software.
359 Accumulated Depreciation - Other
Liabilities
Contra Assets
Synopsis
Account 359 is established to record the total Depreciation of assets which are recorded in Account 289, Other Fixed Assets.
|
Debits |
Credits |
|
1. The total amount of Depreciation applied to Assets recorded in Account 289, Other Fixed Assets when any of these assets are sold or otherwise disposed
|
1. The monthly provision for Depreciation applied to Other Fixed Assets held in Account 289 |
Example 1
Record the monthly provision of $1,000 for depreciation of other fixed assets.
Journal: Standard Entries Journal
|
Entry: |
|
Debit |
Credit |
|
Account 091-09 |
Depreciation – Equipment – General & Administrative |
$1,000 |
|
|
Account 359 |
Accumulated Depreciation – Other |
|
$1,000 |
Comments
This account is provided to show accumulated depreciation on all of the assets included in Account 289, Other Fixed Assets.
Note:
Professional tax and accounting advice should be obtained regarding the proper method of depreciation, which can be applied to Other Fixed Assets.
360 Capital Stock and Additional Paid-In Capital
Owner’s Equity
Net Worth
Synopsis
Account 360 is established to record the amount of capitalization for dealerships, which are organized as corporations. This account cannot be used by dealerships set up as partnerships or proprietorships (see Account 380, Investments).
|
Debits |
Credits |
|
1. Par or assigned value of capital stock retired |
1. Par or assigned value of capital stock issued 2. Additional paid-in capital
|
Example 1
Record the capitalization of a new car dealership. The dealership was capitalized for $4,500,000 with the issuance of 10,000 shares with a par value of $100 per share.
Journal: Cash Receipts
|
Entry: |
|
Debit |
Credit |
|
Account 201 |
Cash on Hand |
$4,500,000 |
|
|
Account 360 |
Capital Stock |
|
$1,000,000 |
|
Account 360A |
Additional Paid-In Capital |
|
3,500,000 |
Example 2
Record the retirement of 1,000 shares of treasury stock at par value.
Journal: General Journal
|
Entry: |
|
Debit |
Credit |
|
Account 360 |
Capital Stock |
$100,000 |
|
|
Account 360B |
Treasury Stock |
|
$100,000 |
Comments
A credit balance represents the par or assigned value of capital stock outstanding and additional paid-in capital.
Note:
Separate general ledger accounts should be established for each class of stock and additional paid-in capital. The balances in these accounts should be combined with Account 360, Capital Stock & Additional Paid In Capital on the trial balance.
If a corporation purchases its own capital stock, one of the following procedures should be utilized.
A. If the stock is retired, its par or assigned value should be recorded in Account 360, Capital Stock & Additional Paid In Capital.
Amounts paid in excess of par or assigned value should be recorded in Account 370, Retained Earnings.
If purchased for less, the discount should be credited to an account captioned Paid-In Surplus. The balance in this account should be combined with Account 360, Capital Stock & Additional Paid In Capital on the trial balance.
B. If the stock is not retired, it should be recorded, at cost, in an account captioned Treasury Stock. The balance in this account should be combined with Account 360, Capital Stock & Additional Paid In Capital on the trial balance.
C. If legal considerations require a recording and operating report presentation different than outlined above, such procedure should be followed.
370 Retained Earnings
Owner’s Equity
Net Worth
Synopsis
Account 370, Retained Earnings is established to record the accumulated profit (or loss) of the dealership. This account is for use by corporations only.
|
Debits |
Credits |
|
1. Amounts paid in excess of par or assigned value of capital stock retired 2. Balance in the dividends account at the end of the accounting year 3. Net loss at the end of the accounting year
|
1. Net profit at the end of the accounting year
|
Example 1
Record the transfer of the net profit of $1,687,894 at the end of the accounting year.
Journal: General Journal
|
Entry: |
|
Debit |
Credit |
|
Account 399 |
Profit and Loss |
$1,687,894 |
|
|
Account 370 |
Retained Earnings |
|
$1,687,894 |
Example 2
Record the reclassification of dividends totaling $500,000 to retained earnings at the end of the year.
Journal: General Journal
|
Entry: |
|
Debit |
Credit |
|
Account 370 |
Retained Earnings |
$500,000 |
|
|
Account 375 |
Dividends |
|
$500,000 |
Example 3
Record the year-end audit adjustment of $5,500 for the deferred taxes due to difference in book and tax depreciation methods. (Note – the books had already been closed for the year)
Journal: General Journal
|
Entry: |
|
Debit |
Credit |
|
Account 370 |
Retained Earnings |
$5,500 |
|
|
Account 333 |
Deferred Taxes |
|
$5,500 |
Comments
A credit balance represents retained profits accumulated in prior years in an incorporated business.
375 Dividends
Owner’s Equity
Net Worth
Synopsis
Account 375 is established to record the amount of Dividends paid or payable to stockholders as declared by the Board of Directors. This account is for corporations only.
|
Debits |
Credits |
|
1. Dividends paid during the current year
|
1. Balance in the account at the end of the accounting year |
Example 1
Record the accrual of declared dividends totaling $500,000.
Journal: General Journal
|
Entry: |
|
Debit |
Credit |
|
Account 375 |
Dividends |
$500,000 |
|
|
Account 331 |
Other Payables |
|
$500,000 |
Example 2
Record the transfer of dividends account to retained earnings at the end of the year.
Journal: General Journal
|
Entry: |
|
Debit |
Credit |
|
Account 370 |
Retained Earnings |
$500,000 |
|
|
Account 375 |
Dividends |
|
$500,000 |
380 Investments
Owner’s Equity
Net Worth
Synopsis
Account 380 is established for partnerships and proprietorships to record the Investments of owners. Corporations may not use this account.
|
Debits |
Credits |
|
1. Balance in the drawings account at the end of the accounting year 2. Net loss at the end of the accounting year
|
1. Investments in an unincorporated business 2. Net Profit at the end of the accounting year
|
Example 1
Record the additional investment of $50,000 made by one of the partners.
Journal: Cash Receipts
|
Entry: |
|
Debit |
Credit |
|
Account 201 |
Cash on Hand |
$50,000 |
|
|
Account 380 |
Investments |
|
$50,000 |
Example 2
Record the transfer of the balance of $10,000 in the drawings account at the end of the accounting year.
Journal: General Journal
|
Entry: |
|
Debit |
Credit |
|
Account 380 |
Investments |
$10,000 |
|
|
Account 390 |
Drawings |
|
$10,000 |
Example 3
Record the transfer of the net profit of $1,365,137 at the end of the accounting year.
Journal: General Journal
|
Entry: |
|
Debit |
Credit |
|
Account 399 |
Profit or Loss |
$1,365,137 |
|
|
Account 380 |
Investments |
|
$1,365,137 |
Comments
A credit balance represents the investment and retained profits accumulated in prior years in an unincorporated business.
Note:
Separate general ledger accounts should be provided for each partner. The balances in these accounts should be combined in Account 380, Investments on the operating report.
390 Drawings
Owner’s Equity
Net Worth
Synopsis
Account 390, Drawings is established to record the amount of funds withdrawn from the dealership by partners or owners of an unincorporated business.
|
Debits |
Credits |
|
1. Withdrawals (other than salaries) during the current year by a proprietor and by partners
|
1. Balance in the account at the end of the accounting year |
Example 1
Record the cash withdrawal (other than salary) of $10,000 by one of the partners.
Journal: Cash Disbursements
|
Entry: |
|
Debit |
Credit |
|
Account 390 |
Drawings |
$10,000 |
|
|
Account 202 |
Cash in Bank |
|
$10,000 |
Example 2
Record the transfer of the balance ($10,000) in the drawings account at the end of the accounting year.
Journal: General Journal
|
Entry: |
|
Debit |
Credit |
|
Account 380 |
Investments |
$10,000 |
|
|
Account 390 |
Drawings |
|
$10,000 |
Note:
Separate general ledger accounts should be provided for each partner. The balances in these accounts should be combined in Account 390, Drawings on the operating report.
399 Profit and Loss
Owner’s Equity
Net Worth
Synopsis
Account 399 is established to report the Profit or Loss of the dealership.
|
Debits |
Credits |
|
1. Total of all costs of sales accounts at the end of the accounting year 2. Total of all expense accounts at the end of the accounting year 3. Total of all deductions from income accounts at the end of the accounting year 4. Net profit at the end of the accounting year |
1. Total of all sales accounts at the end of the accounting year 2. Total of all lease and rental income and sales accounts at the end of the accounting year 3. Total of all additions to income accounts at the end of the accounting year 4. Net loss at the end of the accounting year
|
Example 1
Record the transfer of the net loss of $532,671 to retained earnings at the end of the accounting year.
Journal: General Journal
|
Entry: |
|
Debit |
Credit |
|
Account 370 |
Retained Earnings |
$532,671 |
|
|
Account 399 |
Profit or Loss |
|
$532,671 |