076 Interest Floorplan

Expenses

Semi-Fixed

Synopsis

Account 076, Interest Floorplan is established to record the interest charges on vehicles in inventory, financed under the dealership’s Floorplan line of credit.

Debits

Credits

Interest expense paid or accrued for new and used vehicles on Floorplan

Example 1

Record the accrual of floorplan interest for the current month in the amount of $9,183.

Journal: Standard Entries Journal

Entry:		Debit	Credit
Account 076-01	Interest Floorplan – New Vehicles Department	$6,837
Account 076-02	Interest Floorplan – Used Vehicles Department	$2,346
Account 320	Interest Payable		$9,183

Distribution of Expenses

	Departmental Distribution
076 Interest Floorplan	New Veh.	Used Veh.	Lease & Rental	Mechanical	Body Shop	Parts & Access.	Gen & Admin.
	01	02	03	05	06	07	09
Interest on new vehicles and demonstrators	Floorplan Interest
Interest on used vehicles		Floorplan Interest

Comments

Monthly statements from the lending institution itemizing interest charges should be reconciled and any discrepancies should be resolved immediately. Floorplan Interest on new vehicles and demonstrators should be charged to the New Vehicle Department. Used vehicle Floorplan Interest should be handled similarly.

Note:

When vehicles are financed on a wholesale line of credit, the loan is considered to be short term. This means that vehicles on Floorplan should be paid off as they are sold.

Departmental Distribution