230 Demonstrators
Assets
Inventories
Synopsis
Account 230 is established to record the inventory value of vehicle Demonstrators maintained to provide test rides for customers.
Debits |
Credits |
|
|
Example 1
Record the transfer of a new car into demonstrator inventory for $15,500.
Journal: General Journal
Entry: |
|
Debit |
Credit |
Account 230 |
Inventory – Demonstrators |
$15,500 |
|
Account 231 |
Inventory – New Cars |
|
$15,500 |
Example 2
Record the sale of a CD changer for demonstrator unit for $335. The mechanical labor sale for CD changer installation is $85. The CD changer sale is $250. The cost of internal labor is $25. The CD changer cost is $175.
Journal: Internal Sales
Entry: |
|
Debit |
Credit |
Account 230 |
Inventory – Demonstrators |
$335 |
|
Account 663 |
Cost of Sales – Internal Labor Mechanical |
$25 |
|
Account 684 |
Cost of Sales – Parts – Accessories |
$175 |
|
Account 242 |
Inventory – Parts & Accessories |
|
$175 |
Account 247A |
Inventory – Work in Process – Mechanical |
|
$25 |
Account 463 |
Sales – Internal Labor Mechanical |
|
$85 |
Account 484 |
Sales – Parts – Accessories |
|
$250 |
Example 3
Record the $2000 CTA/CTP credit from the factory on vehicle in demonstrator inventory.
Journal: Purchase
Entry: |
|
Debit |
Credit |
Account 261 |
Factory Receivables |
$2000 |
|
Account 230 |
Inventory – Demonstrators |
|
$200 |
Comments
A debit balance represents the cost of new vehicles set aside for use as demonstrators and for other temporary company service.
Note:
A record of each unit in the vehicle inventories shown below should be made on a Vehicle Inventory Record at the time the unit is acquired.
Stock numbers should be assigned in numerical sequence to new, used and repossessed units acquired. A used unit accepted in trade on the sale of a new unit should be given the same stock number as the new unit sold, but followed by the letter A. A used unit accepted in trade on the sale of another used unit should be given the same stock number as the used unit sold, but followed by the letter B, etc.
Supporting month-end schedules should be prepared. These schedules should be in agreement with the general ledger accounts and compared to physical inventories of the following:
· Demonstrators
· New Cars
· New Trucks
· Other Automotive
Supporting month-end schedules should be prepared. These schedules should be in agreement with the general ledger accounts and compared to physical inventories of the following:
· Used Cars
· Used Trucks
LAST-IN, FIRST-OUT (LIFO) INVENTORY VALUATION
Dealers who have elected to utilize the LIFO method of reporting inventory values should establish separate general ledger accounts captioned LIFO Reserve for each inventory account affected by LIFO.
For example, the entries to establish the initial LIFO adjustment for new vehicles should be handled as follows:
|
New Cars |
|
New Trucks |
Actual inventory |
$425,000 |
|
$175,000 |
LIFO inventory |
$370,000 |
|
$140,000 |
LIFO adjustment |
$55,000 |
|
$35,000 |
|
|
|
|
|
DEBIT |
|
CREDIT |
ENTRY: Acct. 952 LIFO Adjustment |
$90,000 |
|
|
Acct. 231L, Inventory-New Cars-LIFO Reserve |
|
|
$55,000 |
Acct. 237L, Inventory-New Trucks-LIFO Reserve |
|
|
$35,000 |
Subsequent adjustments to each LIFO reserve account should be offset to Account 952, LIFO Adjustment. LIFO adjustments must be recorded and displayed on Page 7, on the operating report.
The Total LIFO Reserve, Line 36, Page 7, will be transferred & displayed on Page 1, Line 35.