238 Other Automotive

Assets

Inventories

Synopsis

Account 238 is established to record inventory of Other Automotive merchandise that cannot be classified as a Car, Truck or Medium Duty Truck.

Debits

Credits

  1. The factory invoice amount, less holdback and other non-related items such as supplemental advertising funds, of new other automotive items acquired

  2. The Internal selling price of dealer-installed accessories and optional equipment and the labor and materials required for installation

  3. The Destination, delivery and handling charges

  4. The lower of trade-in allowance or appraised wholesale value of used items accepted in trade on sales of new and used items

  5. The Cost of used items purchased

  6. The Traveling expenditures when acquiring these items

  7. The selling price of the labor and materials used in reconditioning

  8. The Auction fees on used items purchased

 

  1. The replacement value of accessories, optional equipment and tires removed from other automotive items and placed in Account 243, Tires (inventory) and Account 252, Other (inventory) as applicable

  2. The amount of subsequent factory price reductions

  3. Any required writedown of new items to market value

  4. The monthly writedown of used items to appraised wholesale values

  5. The Inventory value of items sold and otherwise disposed of

 

Example 1

Record a purchase of a motorcycle for $35,000 from another dealer for resale.

Journal: Cash Disbursements

Entry:

 

Debit

Credit

Account 238

Inventory – Other Automotive

$35,000

 

Account 202

Cash in Bank

 

$35,000

Example 2

Record a purchase of a camp trailer for $18,000 directly from the manufacturer for resale.

Journal: New Vehicle Purchase

Entry:

 

Debit

Credit

Account 238

Inventory – Other Automotive

$18,000

 

Account 310A

Notes Payable – Other Automotive

 

$18,000

Example 3

Record an internal repair order for $1,290 for the installation of a mobile TV and DVD player in a boat. The internal labor sale is $170 and the part sale is $1,120. The cost of labor is $51 and the cost of the TV and DVD player is $895.

Journal: Internal Sales

Entry:

 

Debit

Credit

Account 238

Inventory – Other Automotive

$1,290

 

Account 663

Cost of Sales – Internal Labor – Mechanical

$51

 

Account 684

Cost of Sales – Accessories

$895

 

Account 242

Inventory – Parts & Accessories

 

$895

Account 247A

Inventory – Work in Process – Mechanical

 

$51

Account 463

Sales – Internal Labor – Mechanical

 

$170

Account 484

Sales – Parts & Accessories

 

$1,120

Comments

A debit balance represents the inventory value of other automotive items in inventory regularly stocked for resale. This should include all new and used self-propelled vehicles (other than motor homes) and other automotive-oriented merchandise such as:

 

a.   Aircraft

b.   Boats

c.   Camper bodies

d.   Farm tractors

e.   Golf carts

f.    Motorcycles

g.   Scooters

h.   Snowmobiles

i.    Special bodies

j.    Truck equipment and trainers

k.   Utility, house and camp trailers

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

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.

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.