084 Taxes – Real Estate

Expenses

Fixed

Synopsis

Account 084, Taxes – Real Estate is established to record the monthly provision for Taxes due on Real Estate owned by the dealership and used for the auto business only.

Debits

Credits

  1. Monthly provision for Taxes on Real Estate and improvements owned by the dealership

  2. Monthly provision for taxes on a building built by the dealership situated on leased land

 

 

Example 1

Record the monthly expense of $3,813 for the real estate taxes paid in advance.  The $3,813 is distributed to each department as shown in the example below.

Journal: Standard Entries Journal

Entry:

 

Debit

Credit

Account 084-01

Taxes – Real Estate – New Vehicle Department

$1,335

 

Account 084-02

Taxes – Real Estate – Used Vehicle Department

$763

 

Account 084-03

Taxes – Real Estate – Lease & Rental Department

$75

 

Account 084-05

Taxes – Real Estate – Mechanical Department

$763

 

Account 084-06

Taxes – Real Estate – Body Shop Department

$267

 

Account 084-07

Taxes – Real Estate – Parts & Accessories Department

$419

 

Account 084-09

Taxes – Real Estate – General & Administrative

$191

 

Account 270

Prepaid Taxes

 

$3,813

Distribution of Expenses

 

Departmental Distribution

084 Taxes – Real Estate

New Veh.

Used Veh.

Lease & Rental

Mechanical

Body Shop

Parts & Access.

Gen & Admin.

 

01

02

03

05

06

07

09

Taxes applicable to all or several departments

Relative value factor

Relative value factor

Relative value factor

Relative value factor

Relative value factor

Relative value factor

Relative value factor

Taxes on a separate body shop

 

 

 

 

Total expense

 

 

Taxes on a separate new car storage shop

Total expense

 

 

 

 

 

 

Comments

The monthly provision for Real Estate Taxes should be pro-rated to each Department using the relative value factor method.  The exception is when a Department occupies a completely separate facility such as an off-site service department.  For these exceptions, the entire monthly provision is charged to the benefiting Department.