051 Company Vehicle Expense

Expenses

Semi-Fixed

Synopsis

The cost of routine maintenance for vehicles recorded in Account 230, Demonstrators and Account 285, Company Vehicles is posted to Account 051, Company Vehicle Expense. This includes the internal labor and parts cost for performing regularly scheduled maintenance according to the manufacturers recommendations.

Debits

Credits

The Internal selling price of the labor and materials for maintaining company-owned vehicles according to manufacturer recommend service intervals (other than lease and rental units)
The cost of car washes, gasoline and other consumable items related to the operation of Company Vehicles
The cost of license & registration fees and safety inspections for Company Vehicles
Expense allowances to employees for using personal vehicles for company business

Amount charged to employees for using company-owned vehicles other than lease and rental units
Occasional rental fees received from service customers using courtesy cars

Example 1

Record an Internal Repair order in the amount of $125 for Mechanical repairs to maintain a Service loaner. The internal labor is $100 and the parts sale is $25. The cost of labor is $50 and the cost of parts is $20.

Journal: Mechanical Sales

Entry:		Debit	Credit
Account 051-05	Company Vehicle Expense – Mechanical Department	$125
Account 663	Cost of Sales – Internal Labor – Mechanical	$50
Account 681	Cost of Sales Parts – Internal	$20
Account 463	Sales Internal Labor – Mechanical		$100
Account 481	Sales Parts Internal		$25
Account 247A	Work in Process – Mechanical Labor		$50
Account 242	Inventory Parts & Accessories		$20

Example 2

If state and local tax regulations require the payment of sales or excise tax on Internal Sales, then the following example applies.

Record the body shop repair order in the amount of $586 for work performed on a company vehicle. The internal paint and body labor is $140. The internal parts sale is $394, the paint and body shop materials is $31 and the sales tax is $21. The cost of labor is $60. The parts cost is $315 and the cost of paint and body shop materials is $28.

Journal: Internal

Entry:		Debit	Credit
Account 051-05	Company Vehicle Expense – Mechanical Department	$586
Account 673	Cost of Sales – Internal Labor – Paint & Body	$60
Account 679	Cost of Sales – Paint & Body Shop Materials	$28
Account 681	Cost of Sales – Parts Internal	$315
Account 242	Inventory Parts & Accessories		$315
Account 245	Inventory Paint & Body Shop Materials		$28
Account 247B	Inventory Work in Process Body Shop		$60
Account 324	Sales Taxes Payable		$21
Account 473	Sales Internal Labor Paint & Body		$140
Account 479	Sales Paint & Body Shop Materials		$31
Account 481	Sales Parts Internal		$394

Distribution of Expenses

	Departmental Distribution
051 Company Vehicle Expense	New Veh.	Used Veh.	Lease & Rental	Mechanical	Body Shop	Parts & Access.	Gen & Admin.
	01	02	03	05	06	07	09
Expense and maintenance of new vehicle department demonstrators	Total expense
Expense and maintenance of company-owned vehicles (other than lease and rental units) assigned to specific departments	Vehicles assigned	Vehicles assigned	Vehicles assigned	Vehicles assigned	Vehicles assigned	Vehicles assigned	Vehicles assigned
Rental income from employees using company owned vehicles (other than lease and rental units)	(Credit) Department charged with expense of vehicle	(Credit) Department charged with expense of vehicle	(Credit) Department charged with expense of vehicle	(Credit) Department charged with expense of vehicle	(Credit) Department charged with expense of vehicle	(Credit) Department charged with expense of vehicle	(Credit) Department charged with expense of vehicle
Occasional courtesy car rental income from service customers				(Credit) Department making sale	(Credit) Department making sale
Allowance to the office manager using personal vehicle to make bank deposits, credit collections, etc.							Total expense

Comments

Company Vehicles should be used for company business only such as errands, deliveries, providing transportation to customers, etc. When only one department benefits from a Company Vehicle, then the full amount of the expense should be charged to the respective department. For example, expenses related to maintaining a tow truck should be charged to the Mechanical Department (05). If more than one department benefits, then the expense should be pro-rated between departments. For example, the cost to maintain a dealership snowplow should be pro-rated and charged to all departments.

Note:

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.

Departmental Distribution