808 Finance Income-Used Vehicles

Finance & Insurance Activity

Used Vehicle

Sales Synopsis

Account 808 is established to record the Finance Income generated as a result of selling retail finance contracts to lending institutions on Used Vehicles.

Debits

Credits

 

  1. Finance income on customer notes discounted relative to used vehicle sales

  2. Finance charges included in customer notes receivable relative to used vehicle sales

 

Example 1

Record an Other Used Car sale in the amount of $17,076 paid partly with a $14,055 finance contract and $4,000 from the trade-in. The finance contract reserve is $853, sales tax is $854 and Registration Fees are $125.  The inventory value of the used vehicle sold is $15,876 of which $876 is due to Reconditioning.

Journal: Used Car Sales

Entry:

 

Debit

Credit

Account 205

Contracts in Transit

$14,055

 

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 240

Inventory – Used Cars

$4,000

 

Account 446B

Sales – Used Cars Retail – Other

 

$17,076

Account 240

Inventory – Used Cars

 

$15,876

Account 324A

Sales Taxes Payable – Excise Taxes

 

$854

Account 808

Finance Income – Used

 

$853

Account 910

Document Handling Fees

 

$125

Note:

Finance income considered unearned on customer notes receivable may be deferred by establishing and crediting a separate general ledger account captioned Unearned Finance Income, which should be reported with Account 210, Notes Receivable - Customers on the trial balance. This account should be adjusted at the month end through Account 806, Finance Income-New or Account 808, Finance Income-Used , as applicable, with the portion of finance income considered earned.

 

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.