258 Miscellaneous Assets Received in Trade (Inventory)
Assets
Inventories
Synopsis
Account 258 is established to record the inventory value of merchandise taken in trade on the sale of vehicles, which cannot be properly recorded in any other inventory account.
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Debits |
Credits |
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Example 1
Record a used car sold at retail for cash in the amount of $11,000, with sales tax of $550 and Registration fees of $125. A motorcycle with an ACV of $1,500 is received in trade. $10,175 accounts receivable. The cost of sales is $9,453 with reconditioning cost of $453.
Journal: Used Car Sales
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Entry: |
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Debit |
Credit |
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Account 220A |
Accounts Receivables – Customers – Vehicles |
$10,175 |
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Account 258 |
Inventory – Miscellaneous Assets Received in Trade |
$1,500 |
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Account 646B |
Cost of Sales – Used Cars Retail – Other |
$9,000 |
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Account 647B |
Reconditioning – Other Used Cars |
$453 |
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Account 446B |
Sales – Used Cars Retail – Other |
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$11,000 |
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Account 240 |
Inventory – Used Cars |
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$9,453 |
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Account 324A |
Sales Taxes Payable – Excise Taxes |
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$550 |
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Account 905 |
Other Income (Registration Fees) |
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$125 |
Example 2
Record the sale of the miscellaneous asset that was taken in trade on the above example in the amount of $1,500.
Journal: Cash Receipts
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Entry: |
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Debit |
Credit |
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Account 201 |
Cash on Hand |
$1,500 |
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Account 258 |
Inventory – Miscellaneous Assets Received in Trade |
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$1,500 |
Comments
A debit balance represents the inventory value of miscellaneous assets received in trade on vehicle sales, which are intended for resale. This should include such items as:
Jewelry
Real Estate
Stocks
Note:
1. A detail of these items should be made in this account or in a suitable subsidiary record.
2. Gains or losses on disposition of these items should be recorded in Account 905, Other Income or Account 955, Other Deductions, as applicable.