244 Gas, Oil and Grease
Assets
Inventories
Synopsis
Account 244 is established to record the inventory value of Gas (fuel), Oil and Grease on hand.
Debits |
Credits |
|
|
Example 1
Record the $3,885 purchase of oil for inventory.
Journal: Cash Disbursements and Purchase
Entry: |
|
Debit |
Credit |
Account 244 |
Inventory – Gas, Oil and Grease |
$3,885 |
|
Account 300 |
Accounts Payable – Trade Creditors |
|
$3,885 |
Example 2
Record the $75 adjustment for difference between the book balance and the physical count value (the physical count value is lower than the books).
Journal: General Journal
Entry: |
|
Debit |
Credit |
Account 691 |
Cost of Sales – Gas, Oil and Grease |
$75 |
|
Account 244 |
Inventory – Gas, Oil and Grease |
|
$75 |
Example 3
Record an over the counter sale of oil to a retail customer in the amount of $13. The oil sale is $12 and sales tax is $1. The inventory value and cost of sale is $7.
Journal: Parts Sales
Entry: |
|
Debit |
Credit |
Account 225 |
Cash Sales |
$13 |
|
Account 691 |
Cost of Sales – Gas, Oil and Grease |
$7 |
|
Account 244 |
Inventory – Gas, Oil and Grease |
|
$7 |
Account 324 |
Sales Taxes Payable |
|
$1 |
Account 491 |
Sales – Gas, Oil and Grease |
|
$12 |
Comments
A debit balance represents the inventory value of gasoline (fuel), oil, grease and similar materials (lubricants).
Note:
If gasoline is not carried in stock for resale, purchases may be charged directly to the appropriate expense account. Bulk purchases may be charged to Account 244, Gas, Oil and Grease and internal consumption recorded as a direct relief of inventory by a charge to the appropriate expense account.
Physical inventories should be taken at each month end of the following:
· Tires
· Gas, Oil and Grease
· Paint and Body Shop Materials
These inventories should be priced at the lower of cost or market values. Any differences between book and physical count values should be adjusted through the following accounts, as applicable:
· Acct 690, Cost of Sales - Tires
· Acct 691, Cost of Sales - Gas, Oil and Grease
· Acct 679, Cost of Sales - Paint and Body Shop Materials
A physical inventory of other merchandise should be taken at least once each year. It should be priced at the lower of cost or market value. Any difference between book and physical count values should be adjusted through Acct 692, Cost of Sales - Miscellaneous.
LAST-IN, FIRST-OUT (LIFO) INVENTORY VALUATION
Dealers who have elected to utilize the LIFO method for reporting other inventories should establish separate general ledger accounts captioned LIFO Reserve for each other inventory account affected by LIFO.
For example, the entries to establish the initial LIFO adjustment should be handled as follows:
|
Parts andAccessories Inventory |
|
OtherInventory |
Actual inventory |
$170,000 |
|
$50,000 |
LIFO inventory |
$135,000 |
|
$42,000 |
LIFO adjustment |
$35,000 |
|
$8,000 |
|
|
|
|
|
DEBIT |
|
CREDIT |
ENTRY: Acct. 952 LIFO Adjustment |
$43,000 |
|
|
Acct. 242L, Inventory-Parts & Accessories-LIFO Reserve |
|
|
$35,000 |
Acct. 252L, Inventory-Other-LIFO Reserve |
|
|
$8,000 |
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.