080 Rent

Expenses

Fixed

Synopsis

Account 080, Rent is established to record the monthly amount paid or payable to the landlord as rent and other expenses related by agreement to the rental and leasing of property used in the automobile business.

Debits

Credits

Rent for real estate
Taxes included in monthly rental payment
Insurance included in monthly rental payment

Amounts received from subletting part of the premises occupied by the dealership

Example 1

Record the monthly payment of $25,000 for the rent for dealership property. The $25,000 is distributed to each department as shown in the example below.

Journal: Cash Disbursements and Purchase

Entry:		Debit	Credit
Account 080-01	Rent – New Vehicles Department	$5,250
Account 080-02	Rent – Used Vehicles Department	$3,750
Account 080-03	Rent – Lease & Rental Department	$1,250
Account 080-05	Rent – Mechanical Department	$4,750
Account 080-06	Rent – Body Shop Department	$3,750
Account 080-07	Rent – Parts & Accessories Department	$4,000
Account 080-09	Rent – General & Administrative	$2,250
Account 202	Cash in Bank		$25,000

Distribution of Expenses

	Departmental Distribution
080 Rent	New Veh.	Used Veh.	Lease & Rental	Mechanical	Body Shop	Parts & Access.	Gen & Admin.
	01	02	03	05	06	07	09
Individual Rental agreement including taxes and insurance for specific locations	Department occupying location	Department occupying location	Department occupying location	Department occupying location	Department occupying location	Department occupying location	Department occupying location
Rental agreement including taxes and insurance for several or all departments	Relative value factor	Relative value factor	Relative value factor	Relative value factor	Relative value factor	Relative value factor	Relative value factor
New vehicle storage lot Rental	Total expense
Separate used car lot Rental agreement including taxes and insurance		Total expense
Rental income from an affiliated company for the use of space in the dealership general office							(Credit) Total income
Rental income from subletting a portion of a rented used car lot		(Credit) Total income

Comments

The distribution of Rent expense to each Department should be done by a RELATIVE VALUE FACTOR basis as indicated in the table above. Each Department should be charged with a “fair share” of the total dealership Rent expense.

Note:

At the beginning of a lease, if a security deposit representing the final month’s rent is required, the security deposit should be recorded in Account 296, Other Investments and Miscellaneous Assets.

Departmental Distribution