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

  1. The Cost of sublet repairs purchased

 

  1. The Cost of sublet repairs sold

 

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.