220 Accounts Receivable - Customers

Assets

Receivables

Synopsis

Account 220 is established to record the monies owed by customers who have open accounts with the dealership.

Debits

Credits

  1. The amounts due from customer charge sales

  2. The amount of deposited checks returned by the bank

  3. The amount of Lease payments due on leases recorded as sales

  4. The earned portion of deferred income on leases recorded as sales

  5. The amount of Repossession surpluses paid

 

  1. The amount of Customer payments received

  2. The value of Credits allowed to customers

  3. The Deposits received on future sales

  4. The amount of accounts considered uncollectible

  5. The amount of deferred income on leases recorded as sales

  6. The amount of Repossession surpluses due customers

 

Example 1

Record a Service customer charge of $228 for a repair order.  The customer paid labor is $170.  The parts sale is $50.  Shop supplies are $5 and the Sales Tax is $3.  The cost of labor is $51.  The cost of parts is $34 and the cost of shop supplies is $4.

Journal: Service and Parts Sales

Entry:

 

Debit

Credit

Account 220B

Accounts Receivable – Customers – Service and Parts

$228

 

Account 660A

Cost of Sales – Customer Labor – Cars & Light Duty Trucks

$51

 

Account 667

Cost of Sales – Parts – Mechanical Repair Orders Cars & Light Duty Trucks

$34

 

Account 669

Cost of Sales – Shop Supplies

$4

 

Account 460A

Sales – Customer Labor – Cars & Light Duty Trucks

 

$170

Account 467

Sales – Customer Labor – Cars & Light Duty Trucks

 

$50

Account 469

Sales – Shop Supplies

 

$5

Account 242

Inventory – Parts & Accessories

 

$34

Account 242

Inventory – Parts & Accessories

 

$4

Account 247A

Inventory – Work in Process - Mechanical

 

$51

Account 324

Sales Taxes Payable

 

$3

Example 2

Record a check of $228 received in payment for the charges above.

Journal: Cash Receipts

Entry:

 

Debit

Credit

Account 201

Cash on Hand

$228

 

Account 220B

Accounts Receivable – Customers – Service and Parts

 

$228

Example 3

Record returned check of $228 for insufficient funds from the customer above.

Journal: General Journal

Entry:

 

Debit

Credit

Account 220B

Accounts Receivable – Customers – Service and Parts

$228

 

Account 202

Cash in Bank

 

$228

Example 4

Record the receipt of customer deposit for $500 on a future car sale.

Journal: Cash Receipts

Entry:

 

Debit

Credit

Account 201

Cash on Hand

$500

 

Account 220A

Accounts Receivable – Customers – Vehicles

 

$500

Comments

A debit balance represents the net balances of customer accounts.

Note:

Sub-accounts should be created for each receivable category (such as customer Mechanical, Body Shop and Parts & Accessories).  This will make the administrative task of analyzing receivables and collection follow-up more manageable.