033 Postage / Freight

Expenses

Semi-Fixed

Synopsis

Expenses incurred for shipping and receiving goods are recorded in Account 033, Postage / Freight. In addition to parts shipments, costs for overnight express deliveries such as Federal Express, UPS and other carriers are recorded in this account. It also includes the cost of daily postage.

Debits

Credits

The cost of postage other than postage for direct mail advertising
The Cost of Freight and shipping expenses for goods dispatched or received at the dealership including:

a. Postage

b. Trucking Freight bills

c. US Postal Service

d. Federal Express

e. UPS

f. Courier charges

Freight and shipping fees charged to the customer (i.e.) special ordered parts or direct parts shipments

Example 1

Record an invoice of $613 from Federal Express for overnight deliveries. The $613 is distributed to the departments that use Federal Express as shown in the example below.

Journal: Purchase

Entry:		Debit	Credit
Account 033-01	Postage/Freight Expense – New Vehicles Department	$164
Account 033-02	Postage/Freight Expense – Used Vehicles Department	$120
Account 033-04	Postage/Freight Expense – Finance & Insurance Department	$274
Account 033-09	Postage/Freight Expense – General & Administrative	$55
Account 300	Accounts Payable – Trade Creditors		$613

Example 2

Record an UPS invoice in the amount of $537 for the Parts Department.

Journal: Purchase

Entry:		Debit	Credit
Account 033-07	Postage/Freight Expense – Parts & Accessories Department	$537
Account 300	Accounts Payable – Trade Creditors		$537

Distribution of Expenses

	Departmental Distribution
033 Postage / Freight	New Veh.	Used Veh.	Lease & Rental	Mechanical	Body Shop	Parts & Access.	Gen & Admin.
	01	02	03	05	06	07	09
Postage	Usage	Usage	Usage	Usage	Usage	Usage	Usage
The amount of trucking freight bills for shipping parts						Total expense
The cost of shipping goods by USPS Parcel Post, Federal Express, UPS	Usage	Usage	Usage	Usage	Usage	Usage	Usage

Comments

As indicated in the Distribution of Expenses table above, the cost of shipping should be charged to the Department that benefits. Even though some fees are regulated, comparisons should be made to obtain the most favorable rates. Often, discounts are available for volume.

A record of shipments should be kept and when invoices are received from Freight and express companies, the billing should be reconciled with the shipments. Discrepancies should be resolved immediately.

Departmental Distribution

033 Postage / Freight