455 Other Protection Plans (Sales)

Finance & Insurance Activity

Used Vehicle

Sales Synopsis

Account 455 is established to record the Sales of non-GM protection plans on Used Vehicles.

Debits

Credits

  1. Chargebacks due to early termination 

  1. The selling price of non-GM Protection Plans sold with Used Vehicles

 

655 Other Protection Plans (Cost of Sales)

Finance & Insurance Activity

Used Vehicle

Cost of Sales Synopsis

Account 655 is established to record the Cost of Sales of non-GM protection plans on Used Vehicles.

Debits

Credits

  1. The Cost of Sales of non-GM Protection Plans sold with Used Vehicles

 

 

Example 1

Record the sale of an Other Used Car in the amount of $17,076 that has a sale of an Other Protection Plan for $1,500. The car was paid partly with a $15,877 finance contract and $4,000 from the trade-in. The finance contract reserve is $853, sales tax is $876, insurance commissions earned from the sale of a GAP insurance policy are $150 and Registration Fees are $125.  The inventory value of the used vehicle sold is $15,876 of which $876 is due to Reconditioning.  The cost of the Other Protection Plan is $950 and the cost of the GAP insurance policy is $150.

Journal: Used Car Sales

Entry:

 

Debit

Credit

Account 205

Contracts in Transit

$15,877

 

Account 262

Due from Finance Companies

$853

 

Account 646B

Cost of Sales – Used Cars Retail – Other

$15,000

 

Account 647B

Reconditioning – Used Cars Other

$876

 

Account 655

Cost of Sales – Other Protection Plans – Used Cars

$950

 

Account 240

Inventory – Used Cars

$4,000

 

Account 446B

Sales – Used Cars Retail – Other

 

$17,076

Account 455

Sales – Other Protection Plans – Used Cars

 

$1,500

Account 240

Inventory – Used Cars

 

$15,876

Account 300

Accounts Payable – Trade Creditors

 

$950

Account 300

Accounts Payable – Trade Creditors

 

$150

Account 324A

Sales Taxes Payable – Excise Taxes

 

$876

Account 808

Finance Income – Used

 

$853

Account 809

Insurance Commissions Earned – Used Cars

 

$150

Account 910

Document Handling Fees

 

$125

Note:

Transactions, which are related, should be recorded in separate sub-accounts.  Sub-accounts serve to keep records organized for future analysis and auditing.  The sub-accounts in these examples are designated by a letter following the account number (suffix).  Please refer to your DSP's instructions for establishing sub-accounts.