261 Factory Receivables

Assets

Receivables

Synopsis

Account 261 is established to record the amount of receivables owed by the manufacturer to the dealership.

Debits

Credits

The amount New vehicle holdback due on vehicles purchased from the factory
The amount of Factory incentives and reimbursements due
The New vehicle inspection labor and fuel fill claims due
Co-op advertising due on vehicles purchased from the factory
The amount of reimbursement due under the Standards For Excellence (SFE) / Pinnacle programs
The amount of reimbursement due from GM for vehicles purchased under the Marketing Stimulus Payment (MSP) program

The amount of credits received from the factory

Example 1

Record the $1,400 holdback and $467 co-op advertising due from the manufacturer and advertising expense of $233 leaving the inventory value $40,150 truck. The note payable is $42,250.

Journal: New Truck Purchases

Entry:		Debit	Credit
Account 237	Inventory – New Trucks	$40,150
Account 261	Factory Receivables – Holdback	$1,400
Account 261	Factory Receivables – Co-op Advertising	$467
Account 065-01	Advertising Expense – New Cars	$233
Account 310	Notes Payable – New Vehicle & Demos		$42,250

Example 2

Record the $1,400 holdback payment from the manufacturer.

Journal: New Truck Purchases

Entry:		Debit	Credit
Account 300	Accounts Payable – Trade Creditors	$1,400
Account 261	Factory Receivables – Reimbursements		$1,400

Example 3

Record the estimated reimbursement for the amount of $25,000 due under the Standards For Excellence (SFE) / Pinnacle programs.

Journal: General Journal

Entry:		Debit	Credit
Account 261	Factory Receivables – Reimbursements	$25,000
Account 909	GM Reimbursements		$25,000

Example 4

Record amount due for vehicles purchased included the Marketing Stimulus Payment (MSP) program. Example based on month end factory summary of $8,584.

Journal: Purchase Journal

Entry:		Debit	Credit
Account 261	Factory Receivables – Reimbursements	$8,584
Account 909	GM Reimbursements		$8,584

Comments

A debit balance represents amounts due from the factory for:

a. New vehicle holdback

b. Incentives and reimbursements

c. Co-op advertising

d. New vehicle inspection labor claims

e. Fuel fill claims

f. MSP funds due

Note:

The month-end balance of new vehicle holdback due should be reconciled with the manufacturer’s statement. Any difference should be determined and corrected.

Sub-accounts should be created for each Factory Receivable category such as Holdback, Incentives, New Vehicle Inspection & Fuel, Advertising refunds.

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.