807 Insurance Commission Earned-New Vehicles

Finance & Insurance Activity

New Vehicle

Sales Synopsis

Account 807 is established to record Commissions earned for selling supplemental insurance coverage on New Vehicles.

Debits

Credits

Insurance commissions earned relative to new vehicle sales including:

a. Credit Life

b. Accident & Health

c. GAP Insurance

Example 1

Record a new vehicle sale for the amount of $17,571 with a finance contract reserve of $300, sales tax of $879, Registration fees of $125 and supplemental insurance commission earned in the amount of $300. The inventory value is $16,721 and the cost of the supplemental insurance is $150.

Journal: New Vehicle Sales

Entry:		Debit	Credit
Account 205	Contracts in Transit	$19,025
Account 262	Due from Finance Companies	$300
Account 600-618	Cost of Sales – New Cars – Retail	$16,721
Account 400-418	Sales – New Cars – Retail		$17,571
Account 231	New Car Inventory		$16,721
Account 300	Accounts Payable – Trade Creditors		$150
Account 324A	Sales Taxes Payable – Excise Taxes		$879
Account 806	Finance Income – New		$300
Account 807	Insurance Commission Earned – New		$300
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.