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 |
|
|
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.