284 Furniture and Fixtures

Assets

Fixed

Synopsis

Account 284 is established to record the acquisition cost of Furniture and Fixtures purchased by the dealership and used in the automobile business.

Example 1

Record the purchase of a telephone system in the amount of $160,000.  A deposit of $15,000 was given at the time the contract for the new telephone system was signed.

Journal: Cash Disbursements and Purchase

Example 2

Record the sale of the old telephone system for the amount of $10,000. Accumulated Depreciation is $100,000.

Journal: Cash Receipts

Example 3

Record the trade-in of an old copier machine (original cost $5,000) with a book value of $500 for a new copier that sells for $10,000.  An allowance of $750 was received for the old copier.  The cost of the new copier is recorded on the books as $10,000 for the original cost less the difference of the allowance given for the old copier versus the book value ($750-$500=$250), or $9,750 ($10,000-$250).

Journal: Cash Disbursements and Purchase

Comments

A debit balance represents the cost of furniture and fixtures acquired and built for use in the business, such as:

a.   Chairs

b.   Desks

c.   File cabinets

d.   Moveable partitions

e.   Office machines

f.    Rugs

g.   Safes

h.   Signs

i.    Tables

j.    Telephone 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