021 Salaries – Supervision

Expenses

Personnel

Synopsis

The compensation paid to managers and other supervisory personnel is recorded in Account 021, Salaries – Supervision.  Not included are incentives, spiffs and commissions, which are properly posted to Account 026, Incentives - Supervision.

Debits

Credits

  1. Compensation (except absentee compensation) of employees functioning as supervisors of operating departments and of the general office staff, such as a Business Manager, General Manager, New Vehicle Sales Manager, Service Manager, Body Shop Manager, Parts Manager and other supervisory personnel

  2. Compensation of an individual Employed on a salary basis who functions as a supervisor and as a salesperson such as a Used Vehicle Manager

  3. Compensation of an individual functioning as a service manager or shop foreman and as a productive technician

 

 

Example 1

Record the $2,000 salary paid to parts manager of which $700 is payroll taxes, and a $150 payroll deduction for partial repayment of a loan.

 

Journal: Payroll

Entry:

 

Debit

Credit

Account 021-07

Salaries – Supervision – Parts & Accessories

$2,000

 

Account 025-07

Payroll Taxes – Parts & Accessories Department

$153

 

Account 321

Salaries, Wages & Commissions Payable

 

$1,303

Account 294

Notes and Accounts Receivable – Other

 

$150

Account 323

Payroll Taxes Payable

 

$700

Distribution of Expenses

 

Departmental Distribution

021 Salaries Supervision

New Veh.

Used Veh.

Lease & Rental

Mechanical

Body Shop

Parts & Access.

Gen & Admin.

 

01

02

03

05

06

07

09

Compensation of the general manager

 

 

 

 

 

 

Total compensation

Compensation of the business manager

 

 

 

 

 

 

Total compensation

Compensation of the lease and rental department manager

 

 

Total compensation

 

 

 

 

Compensation of the parts and accessories department manager

 

 

 

 

 

Total compensation

 

Compensation of the combination general manager and new vehicle department manager

 

Time

 

 

 

 

 

 

Time

Compensation of the service department manager or body shop manager

 

 

 

Time

Time

 

 

Comments

As indicated in the Expense Distribution chart above, each Supervisor’s compensation should be debited to the respective Department.  In the case where a manager oversees two (2) or more Departments, then the compensation should be pro rated and proportionately charged to each respective Department.  Compensation plans for Supervisors should contain incentives for controlling expenses and producing profit (see Account 026, Incentives - Supervision).

Note:

Job Descriptions should be prepared for each position.  Periodic reviews should be conducted to discuss job performance and to set goals for the future.

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.