070 Travel and Entertainment

Expenses

Semi-Fixed

Synopsis

Account 070, Travel and Entertainment is established to record the expenses related to conducting business away from the dealership. This includes transportation, hotel and meal expense while attending meetings and contacting business associates.

Debits

Credits

Cost of entertainment for business purposes
Cost of travel (transportation, lodging and meals) for business purposes, other than when acquiring vehicles and attending training schools

Example 1

Record the reimbursement to General Manager for lunch with factory representative in the amount of $112 which is distributed to each department as shown in the example below.

Journal: Cash Disbursements

Entry:		Debit	Credit
Account 070-01	Travel & Entertainment – New Vehicles Department	$28
Account 070-02	Travel & Entertainment – Used Vehicles Department	$28
Account 070-05	Travel & Entertainment – Mechanical Department	$28
Account 070-07	Travel & Entertainment – Parts & Accessories Department	$28
Account 202	Cash in Bank		$112

Example 2

Record the cost of the airline ticket in the amount of $600 for the Dealer Principal to attend a Dealer Council meeting. The $600 is distributed to each department as shown in the example below.

Journal: Cash Disbursements and Purchase

Entry:		Debit	Credit
Account 070-01	Travel & Entertainment – New Vehicles Department	$150
Account 070-02	Travel & Entertainment – Used Vehicles Department	$150
Account 070-05	Travel & Entertainment – Mechanical Department	$150
Account 070-07	Travel & Entertainment – Parts & Accessories Department	$150
Account 300	Accounts Payable – Trade Creditors		$600

Distribution of Expenses

	Departmental Distribution
070 Travel and Entertainment	New Veh.	Used Veh.	Lease & Rental	Mechanical	Body Shop	Parts & Access.	Gen & Admin.
	01	02	03	05	06	07	09
Travel for general business purposes							Total expense
Travel to take used vehicles to auction		Total expense
Entertainment for business purposes	Department benefited	Department benefited	Department benefited	Department benefited	Department benefited	Department benefited	Department benefited
Travel for auto show	Total expense

Comments

With the following exceptions, all business related Travel and Entertainment expenses should be debited to this account and charged to the department incurring the expense or benefiting from the expenditure. A policy for business travel and entertainment and guidelines for limiting expenses should be prepared in writing for employees. Travel and Entertainment expenses should be charged directly to the department incurring or benefiting from the expense. The exceptions are:

The travel expenses incurred to acquire vehicles either for “new vehicle dealer swaps” or to buy used vehicles from a used car auction (“sale”), should be recorded in Account 013, Delivery Expense.

The Travel expenses for employees to attend training classes should be recorded in Account 075, Training Expense.

Note:

Professional tax and accounting advice should be obtained regarding the proper documentation of travel or entertainment expenses.

Departmental Distribution