281 Building and Improvements - Auto Business Only

Assets

Fixed

Synopsis

Account 281 is established to record the acquisition cost of Building and Improvements purchased by the dealership and used in the automobile business.

Debits

Credits

  1. The Cost of building and improvements acquired

 

  1. The Cost of building and improvements sold and otherwise disposed of

 

Example 1

Record the $4,267,000 cost of construction of the new dealership building.

Journal: Cash Disbursements and Purchase

Entry:

 

Debit

Credit

Account 281

Buildings & Improvements (Auto Business Only)

$4,267,000

 

Account 202

Cash in Bank

 

$4,267,000

Example 2

Record the cost of $5,814 for write-off of landscaping that was destroyed by a snowstorm and $12,550 in Other Deductions.  The dealership owns the building & improvements for the amount of $18,364. 

Journal: General Journal

Entry:

 

Debit

Credit

Account 351

Accumulated Depreciation – Buildings & Improvements

$5,814

 

Account 955

Other Deductions

$12,550

 

Account 281

Buildings & Improvements (Auto Business Only)

 

$18,364

Comments

A debit balance represents the cost of buildings and improvements situated on land owned by the dealership.

Note:

ONLY ASSETS USED IN THE OPERATION OF THE DEALERSHIP BUSINESS SHOULD BE INCLUDED IN THESE ACCOUNTS.

 

Cost of assets should include additional items such as:

 

  1. Expenses incidental to securing title
  2. Installation and construction costs, including interest during construction
  3. Accessories and optional equipment
  4. Freight
  5. Sales Tax