074 Telephone

Expenses

Semi-Fixed

Synopsis

Cost related to Telephone lines and fax service are recorded in Account 074, Telephone.

Debits

Credits

Cost of Telephone and fax services
Cost of Intercom systems
The monthly cost of phone and fax equipment leases
The monthly cost of service contracts for phone and fax equipment and services

The reimbursement from employees for personal, long distance calls

Example 1

Record the monthly invoice of $4,280 from the local telephone company, which is distributed to each department as shown in the example below.

Journal: Purchase

Entry:		Debit	Credit
Account 074-01	Telephone – New Vehicles Department	$899
Account 074-02	Telephone – Used Vehicles Department	$642
Account 074-03	Telephone – Lease & Rental Department	$86
Account 074 05	Telephone – Mechanical Department	$813
Account 074-06	Telephone – Body Shop Department	$428
Account 074-07	Telephone – Parts & Accessories Department	$770
Account 074-09	Telephone – General & Administrative	$642
Account 300	Accounts Payable – Trade Creditors		$4,280

Distribution of Expenses

	Departmental Distribution
074 Telephone	New Veh.	Used Veh.	Lease & Rental	Mechanical	Body Shop	Parts & Access.	Gen & Admin.
	01	02	03	05	06	07	09
Basic Telephone service charge	Outlets	Outlets	Outlets	Outlets	Outlets	Outlets	Outlets
Toll calls and long distance calls	Department responsible	Department responsible	Department responsible	Department responsible	Department responsible	Department responsible	Department responsible
800 line or lease line	Usage	Usage	Usage	Usage	Usage	Usage	Usage
Separate used car office billing		Total expense
FAX charges	Usage	Usage	Usage	Usage	Usage	Usage	Usage

Comments

The cost of Telephone and fax service should be pro-rated to each department based on usage as indicated in the Expense Distribution table above. Long distance calls should be charged to the respective Department. When control of Long Distance calls becomes an issue, an authorization system should be adopted so that permission must be granted to make all such calls.

Departmental Distribution