246 Sublet Repairs
Assets
Inventories
Synopsis
Account 246 is established to record the inventory value of Sublet Repairs, which have been completed, but not yet sold to customers.
Debits |
Credits |
|
|
Example 1
Record the $450 cost of sublet work purchased on a service customer’s vehicle.
Journal: Cash Disbursements and Purchase
Entry: |
|
Debit |
Credit |
Account 246 |
Inventory – Sublet Repairs |
$450 |
|
Account 202 |
Cash in Bank |
|
$450 |
Example 2
Record the cash sale of the above sublet repairs to the service customer in the amount of $525. The sublet repair sale is $500 and sales tax is $25. The cost of sale for sublet repairs is $450.
Journal: Service Sales - Cash
Entry: |
|
Debit |
Credit |
Account 225 |
Cash Sales |
$525 |
|
Account 666 |
Cost of Sales – Sublet Repairs |
$450 |
|
Account 466 |
Sales – Sublet Repairs |
|
$500 |
Account 246 |
Inventory – Sublet Repairs |
|
$450 |
Account 324 |
Sales Taxes Payable |
|
$25 |
Comments
A debit balance represents the cost of sublet repairs unsold. Sublet repair is defined as service work assigned to outside garages, specialty shops, and other automotive jobbers.
Note:
A month-end schedule should be prepared showing the cost of each unsold sublet repair. Any difference between the total of this schedule and the account balance should be determined and corrected. It is suggested that a memo detail list of sublet repair purchases be maintained as an aid in costing sublet repair sales and in preparing the month-end schedule. Each purchase should be identified with the related repair order number.