237 New Trucks
Assets
Inventories
Synopsis
Account 237 is established to record the inventory value of New Trucks and Motor Homes on hand.
Debits |
Credits |
|
|
Example 1
Record the purchase of a truck from the manufacturer in the amount of $42,250. The inventory value of the truck is $40,150, with Holdback of $1400, Co-op Advertising of $467 and New Cars Advertising expense of $233.
Journal: New Truck Purchases
Entry: |
|
Debit |
Credit |
Account 237 |
Inventory – New Trucks |
$40,150 |
|
Account 261 |
Factory Receivables – Holdback |
$1,400 |
|
Account 261 |
Factory Receivables – Co-op Advertising |
$467 |
|
Account 065-01 |
Advertising Expense – New Cars |
$233 |
|
Account 310 |
Notes Payable – New Vehicle & Demos |
|
$42,250 |
Example 2
Record a new truck sale for the amount of $41,551 with a finance contract reserve of $1,297, sales tax of $2,078 and Registration Fees of $180. The inventory value of the truck is $40,151.
Journal: New Truck Sales
Entry: |
|
Debit |
Credit |
Account 205 |
Contracts in Transit |
$43,809 |
|
Account 262 |
Due from Finance Companies |
$1,297 |
|
Account 623-638 |
Cost of Sales – New Trucks – Retail |
$40,151 |
|
Account 423-438 |
Sales – New Trucks – Retail |
|
$41,551 |
Account 237 |
Inventory – New Trucks |
|
$40,151 |
Account 324A |
Sales Taxes Payable – Excise Taxes |
|
$2,078 |
Account 806 |
Finance Income – New |
|
$1,297 |
Account 910 |
Document Handling Fees |
|
$180 |
Comments
A debit balance represents the cost of new trucks and motor homes in inventory.
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.
Transactions, which are related, should be recorded in separate sub-accounts. Sub-accounts serve to keep records organized for future analysis and auditing. The sub-accounts in these examples are designated by a letter following the account number (suffix). Please refer to your DSP's instructions for establishing sub-accounts.
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.