282 Machinery and Shop Equipment

Assets

Fixed

Synopsis

Account 282 is established to record the acquisition cost of Machinery and Shop Equipment purchased by the dealership and used in the automobile business.

Debits

Credits

  1. The Cost of machinery and shop equipment acquired

  2. The Cost of machinery and shop equipment built

 

  1. The Cost of machinery and shop equipment sold and otherwise disposed of

Example 1

Record the purchase of a tire machine in the amount of $8,750.

Journal: Cash Disbursements and Purchase

Entry:

 

Debit

Credit

Account 282

Machinery & Shop Equipment

$8,750

 

Account 202

Cash in Bank

 

$8,750

Example 2

Record the disposal of obsolete diagnostic equipment in the amount of $5,000. The accumulated depreciation of the Machinery is $3,438 and the amount of Other Deductions is $1,562.

Journal: General Journal

Entry:

 

Debit

Credit

Account 352

Accumulated Depreciation – Machinery & Shop Equipment

$3,438

 

Account 955

Other Deductions

$1,562

 

Account 282

Machinery & Shop Equipment

 

$5,000

Comments

A debit balance represents the cost of machinery, permanent tools and equipment acquired and built for the use in the service department. This includes items of a moveable nature, not a permanent part of the building such as:

 

a.      Benches

b.      Cabinets

c.      Hoists

d.      Overhead racks

e.      Tool racks

f.        Jacks

g.      Diagnostic equipment

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