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 |
|
|
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.